Process Improvement

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Business Process Improvement Part II
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Continuous Audit for Business Process
Improvement Examples from Fidelity Investments
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GTS Wire Transfer Audit

• Audit Objectives
• Develop audit and monitoring tools to detect
  unauthorized wires.
• Provide continuous, efficient, and non-intrusive
  audits of wire payment activity.
• Ensure details of wire payments processed by the
  bank are consistent with the original wire
  request.
• Establish a base-line for future analysis of wire
  payment analysis

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Corporate Treasury Wire Transaction Process
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Manual vs. Continuous Auditing

• Present System (Manual Confirmation Validation)
• The Cash Administrator uploads prints the
  Intraday Statement Report several times a day
  from Bank One. This report shows the daily
  activity running through the Bank One
  concentration account only. This report serves
  as an interim confirmation that the transmitted
  wires were received by Bank One. The CA ensures
  that all wires transmitted are listed on this
  report manually.
• Continuous Auditing (Automated Confirmation and
  Exception Reporting)
• Wires imported by Corporate Treasury is
  electronically matched with confirmation files
  received by FW2000 and exception reports are
  generated.

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Wire Transfer Data Transformation

• Sample Wire Transaction Requested by ESS
  (Employee Shareholder System) and Imported to XRT
  System by Treasury Cash Administrator (raw data
  has no column headings, each record is shown in
  four lines)
• 1. "NONREP,5419121,CO,ACH CCD,36833.19,,,01/14/200
  0,22,,,,,,,,,,"
• 2. "BENE,,,29019000519053202,John Brown,,,,,,,,"
• 3. "BANK,,191234035,,,,,,,,"
• 4. DETAIL,NTEUMB Bank"

Wire Transfer Audit Table Created After Data
Transformation
Data Transformation Code
data a71599a infile 'h\oaa\projects\gts\test1'
truncover dsd dlm',' input type1 foliocod
co paytype amountdollar15.2 un1 un2 valdate
10. un3 un3 un5 un6 un6 un7 un8
un9 / type2 un10 un11 benacct 30.
benname 30. un12 un13 un14 un15 un16 un17 un18
/ type3 un19 ABA 15. un20 un21 un22
un23 un24 un25 un26 / type4 BankName
50. format date ddmmyy10. format amount
dollar15.2 run

• The names and account numbers have been changed
  to ensure confidentiality.

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Advantages of Continuous Auditing

• Enables a thorough understanding of transaction
  processing details.
• Unravels system weakness that can not be detected
  by merely auditing of business environment and
  processes.
• Eliminate barriers preventing auditor to access
  crucial data by creating audit data marts.
• Helps auditors to spend time on analysis of audit
  tests and investigation of exception reports
  instead of accessing data.
• Creates a non-intrusive and proactive auditing
  environment.
• Significant long-term cost savings achieved for
  repeated audits of the same business system(s).

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Fidelity Data Intelligence System (FDIS)
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GTS Audit Testing Menu
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Boston Coach Audit

• What Has Been Accomplished by Data
  warehousing/Analysis
• Simple point and click technology for Boston
  Coach fair analysis.
• Auditor has instant access to data.
• Data is transformed, formatted and labeled.
• Automatic generation of exception reports.
• Capability to download data to a familiar
  environment (MSACCESS, EXCEL) for further
  analysis.
• Graphics capability to see the data.
• Capability to run either predefined and
  customized audit tests.

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Automating Data Extraction/Analysis Tasks
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Boston Coach Audit Menu
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Boston Coach Automated Audit Tests
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A Sample Audit Exception Report
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Audit System Capable of Creating Analysis Trends
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Creating Customized Queries from Standardized
Data
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Employee Vendor Match

• What Has Been Accomplished by Data
  warehousing/Analysis
• Automated matching of employee and vendor master
  files.
• An improvement over previous methods of matching
  by normalizing the employee name field using scan
  function, and identifying employee name contained
  within vendor name.
• A secured web-based GUI for easy accessing of
  employee/vendor data.
• Capability to further analyze the normalized data
  using Enterprise Guide.

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Employee-Vendor Match Web-Enabled Application
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Employee-Vendor Match Main Menu
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EVALUATING PROCESS EFFICIENCY Questions to
Consider

1. To what extent is the process mechanized? For
   all those tasks done manually, what is the reason
   they could not be mechanized or automated?
2. Is the process controlled in part by ex post
   review and disposition of error reports? Analyze
   errors by type and source - trace back to their
   origins and determine why they happen.

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EVALUATING PROCESS EFFICIENCY Questions to
Consider

• Is the input of information made "idiot-proof"
  i.e does the system disallow the input of
  information which would be incomplete or
  incorrect?
• Are certain tasks or pieces of the process
  repeated? Why?

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EVALUATING PROCESS EFFICIENCY Questions to
Consider

• When a form or other critical document is in an
  area or with a particular person, what percentage
  of the time is it being acted upon and what
  percentage of time is it "waiting"?
• Why is it waiting?

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EVALUATING PROCESS EFFICIENCY Questions to
Consider

• How many different people have to touch a given
  document or piece of information while it is in a
  particular department, work area, or process?
• How many times does the same person touch the
  same document? (How much "pick up and put down"
  time is there, and why?)

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EVALUATING PROCESS EFFICIENCY Questions to
Consider

• Is the same information filed in multiple ways or
  places, and is there a reason?
• Is information filed and then never referred to?
• Does management have "work standards" on how many
  items should be processed per unit of time (or
  other measure)?

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EVALUATING PROCESS EFFICIENCY Questions to
Consider

• For tasks or processes that are the same or
  similar, are there consistent measurable
  differences in throughput volume or cycle time
  between locations or people? Why?

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Six-Sigma Approach to Continuous Improvement

• Six-Sigma is a highly rigorous and analytical
  approach to quality and continuous improvement
  with an objective to
• Improve profits through defect reduction
• Yield improvement
• Improved customer satisfaction
• Best-in-class performance.

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Six-Sigma Success Factors

• Acute understanding of customers and the product
  or service provided
• Emphasis on the science of statistics and
  measurement
• Meticulous and structured training development
• Strict project-focused methodologies
• Top management support.

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Selected Companies with Six-Sigma Approach to BPI

• Honeywell (1994)
• Motorola (1987)
• GE (1995)
• Polaroid (1998)
• Texas Instruments (1988)

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How the Six-Sigma Statistical Concept Works

• Six-Sigma means a failure rate of 3.4 parts per
  million or 99.9997.
• At the six standard deviation from the mean under
  a normal distribution, 99.9996 of the
  populations under the curve with not more tha3.4
  parts per million defective.
• The higher the sigma value, the less likely a
  process will produce defects as excellence is
  appraoched.

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DMAIC Approach

• DMAIC is an approach for realizing Six-Sigma
  condition.
• Define,
• Measure,
• Analyze,
• Improve,
• Control.

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Define

• Project Definition,
• Project Charter,
• Gathering Voice of the Customer,
• Translating Customer Needs into
  Specific-Requirements.

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Measure

• Process Mapping (AS-Is Process),
• Data Attributes (Continuous vs. Discrete),
• Measurement System Analysis,
• Gage Repeatability and Reproducibility,
• Measuring Process Capability,
• Calculating Process Sigma Level,
• Visually Displaying Baseline Performance.

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Analyze

• Visually Displaying Data (Histogram, Run Chart,
  Pareto Chart, Scatter Diagram),
• Value Added Analysis,
• Cause and Effect Analysis,
• Determining Opportunity (Defects and Financial)
  for Improvement,
• Project Charter Review and Revision.

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Improve

• Brainstorming,
• Quality Function Deployment,
• Failure Modes and Effects Analysis (FMEA),
• Piloting Your Solution,
• Implementation Planning,
• Culture Modification Planning.

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Control

• Statistical Process Control (SPC) Overview,
• Developing a Process Control Plan,
• Documenting the Process.

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Process Mapping Guidelines FLOWCHART SYMBOLS
SYMBOL NAME DESCRIPTION

Activity/Processing Indicates that an activity or task is being performed. Write the specific activity, such as Check for Errors or Prepare Form inside the symbol.
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Process Mapping Guidelines FLOWCHART SYMBOLS
SYMBOL NAME DESCRIPTION
Decision When this symbol appears, the task sequence flows to the right if the decision is no or down if the decision is yes. As with other symbols, write a brief description inside the symbol, keeping it as simple as possible. Often a simple Approved? or OK? is sufficient.

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Process Mapping Guidelines FLOWCHART SYMBOLS
SYMBOL NAME DESCRIPTION
Document Represents the generation of a physical document. Multiple overlaying symbols are used if multiple documents are generated. Write the specific document inside the symbol.


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Process Mapping Guidelines FLOWCHART SYMBOLS
SYMBOL NAME DESCRIPTION
Direction of Flow Flow arrows show the order in which activities are completed. The arrows depict the process flow.


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Process Mapping Guidelines FLOWCHART SYMBOLS
SYMBOL NAME DESCRIPTION
Chart Connections Shows the continuation of the flow from page to page of a Process Map. When you reach the bottom of a page, draw a flow chart connector symbol and connect it to the last item on the chart. Label the inside of the symbol with a letter beginning with A and the page number on which the process continues. The label A/2 for example, instructs the reader to look for Point A on page 2.


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Process Mapping Guidelines FLOWCHART SYMBOLS

• Remember When using flowchart symbols, make
  sure you are consistent and use a legend.

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