Article Transparency was published in Business & Power journal.

Business and Power 16.10.2007

TRANSPARENCY

Preparation of various internal and external activities begins upon company launch to IPO and attracting of investments by means of stock floatation on stock markets. Process of creation transparent financial accounting takes important place in it. Specialists consider that implementation of ERP-system can be ideal tool enables to automate many processes while preparing multivariate company reports.

For successful stock floatation on stock markets the availability of transparent system for financial resources management and accounting and statement in accordance with international standards takes very important place in list of required terms. If company starts a large-scale project for launch preparation to IPO, the task of getting qualitative financial accounting in compliance with requirements of International Financial Reporting Standards will be one of the stages of internal activities.

One of the main requirement suggests that there is necessity to ensure the process of collection and consolidation of initial information from all company sections, process of preparing reports on “various” requirements (for investors, for business management, for relinquishment to governmental authorities) in one common technology on the basis of one and the same initial data, provide convenient tools of accounting records reclassification and input of corrections as well as facilities for accounting adjustment and development, provide possibility of system adjusting by the force of owned specialists.

“Process in question is required for promotion of appeal in the eyes of our potential investors and successful prime stock and company floatation, – noted Elena Shilkova, Executive Director of SynConsult Company. – First of all, it is necessary to provide investors with clear view of company strategic plans and growth prospects. They should clearly understand which business model and types of business are more perspective, how management is performed and how organizational and financial structures are contrasted”. Therefore, for successful stock floatation in the requirements list there are items on availability of debugged and transparent system for financial resources management and statement and accounting in accordance with international standards, i.e. they are targeted to reveal the actual state of proceedings within enterprise.

Specialists assuredly claim that upon using ERP system such requirements and principles are provided in advance with information system standards itself. In fact, for rapid and successful receipt of accounts the system must have continuity and “transparency” of information flows; presence of documentary interfaces; comparability of data with preceding accounting periods; permanency of information processing rules and procedures and protection of information from unauthorized access.

According to Oleg Baranovskiy, Managing Director of SynConsult Company, the key advantage of ERP – system application for successful confirmation of accounting upon launch to Stock Exchange Market is compression of its preparation terms. “International standards dictate highly stiff deadline of submission of accounting and provision of these terms in default of integrated information system might become simply impossible, - commented Mr. Baranovskiy. – If company starts new large-scale project on preparation to access to Stock Exchange Market, the reception of qualitative financial accounting in compliance with IFRS is one of the key questions and tasks which are taken into consideration and the best tool for it this one is integrated ERP-system as a basis of corporative information environment”.

“At the same time, we can not forget that all information flow should be understandable, appropriate, essential, reliable, timely, firsthand and error-free, - added Shukhrat Latypaev, Managing Partner of SynConsult Company– To date, Microsoft Dynamics NAV offers facilities which meet these requirements and enable to account within the context of IFRS requirements”.

Microsoft Dynamics NAV offers sufficiently wide, helpful and convenient standard user accounting package including general ledger, trial balance, turnover balance sheets and cards on financial accounts and all encountered analytical data with reference to corresponding accounts. Tool for generating of reports upon users’ requests is added to the pre-adjusted accounting package, report program generator is flexible tool that allows adjusting unlimited quantity of various analytical, comparison facts with the forecasts and other different reports. This is easy-to-use tool and available for adjustment of accounting as by the company’s internal team of IT specialists, so by users themselves who create accounting.

According to Habib Dilawar, Managing Partner of SynConsult Company the important feature which extends possibilities for generating reports is consolidation facilities and opportunity of filtering entered into data reports. Thus, by means of pressing the standard buttons in the forms of request before forming a report, it is possible to receive figures to the report by company group in whole, either on one of the companies that enter the group of the companies, or on one of the company’s branch which enter the group of the companies within several seconds. “Among standard packages and statement generation facilitates by us, the SynConsult Company, - says Mr. Habib, - several accounting packages are adjusted upon targets and users of these reports in the profile of creation Microsoft Dynamics NAV version localized under Kazakhstan requirements. Reports package as tax and statistical reports is created for submission to governmental authorities. Number of specific reports on demand of Ernst & Yong auditors and PWC are realized in the format corresponding to auditors’ requirements”. Likewise, the reports in the format of IFRS requirements such as Balance, Profit-and-loss Report, Cash Flow Statement (in 2 methods) and Statement of Changes in Owner’s or Stockholder’s Equity as for separate companies, so for company group.

Obviously, the preparation to IPO is long and multiple-aspect project for the company. The required “transparency” in acquiring of management accounting rates on the basis of official accounting data and receipt of accounting in compliance with requirements of International Accounting Standards is labor-intensive process if except contemporary facilities of automation. According to the company’s experience includes attraction of investments by floating stocks, to meet challenge in the financial area needs nearly 2-3 years. During this period, the company performs number of preparatory activities on aligning financial structure, provision of adherence to requirements for information systems and to the system of internal control. As a rule the integrated system which provides common data warehouse for preparation of financial accounting is created for these purposes. And in terms of companies which have passed this phase, we can say that the most preferable option for them was alignment of financial accounting on the basis of ERP-system.

Juliya Tarasenko.