Part 6- Ensuring Compliance
From GAAP and Sarbanes-Oxley (SOX) to emerging standards like Revenue Recognition, midstream companies must adhere not only to multiple, highly complex internal controls, but also state and federal regulations. Are you completely confident in your plant accounting software to ensure compliance across the board? Or, is your current oil and gas ERP solution provider even concerned about your compliance? If you are a user of legacy software, then the answer is likely a resounding “no!”
Our blog series covering the top 7 reasons why you should replace your legacy plant accounting software is coming to a close soon. So far, I’ve covered 5 of those topics, including: enhancing data transparency and accessibility, improving user experience, benefits of a unified platform built on the cloud, making upgrades painless, and eliminating Excel workarounds. The last blog will explore the many ways legacy software slows users down and how to speed things up. But first, this week’s blog series will address how legacy plant accounting software may put your organization’s compliance at risk.
Is Your Data Audit Ready?
Customers of legacy plant accounting solutions are at risk on multiple fronts, including a lack of transparency into financial results and complex calculations. That “black box” is why accountants often rely heavily on spreadsheets to duplicate results or even perform tasks their legacy software can’t do (the topic of the last blog). With so many copies of your accounting data floating around, companies are creating multiple versions of the truth. That’s not good when it comes time for an internal review, or worse, an external audit.
W Energy Software eliminates the need for spreadsheet workarounds while also enhancing data transparency and trust in your accounting data. Our powerful calculation trace (Calc Trace) feature provides a clear audit trail for system calculations, including settlement results, taxes, accounting results, and disbursement owner amounts. Users and auditors can easily backtrace financial results from values calculated on gas statements to accounts receivable/payable. Many W Energy Software customers will take a snapshot of a Calc Trace report and send it to customers when a request comes in around how fees were calculated (if you’re relying on Excel, that can be a real fire drill). Additional tools for assisting with audits include our Show Association Graph, which lets users easily identify where data objects are used so you can see the impact of setup changes. This functionality helps teams understand the flow and internal relationships of data on screens such as meters, formulas, rates, and many others.
When Accounting Standards Change
As accounting standards change, your ERP software should evolve. W Energy Software offers flexible GL mapping at a contract level that allows for accurate application of new Revenue Recognition standards. Your chart of accounts may require the ability to book different entities to different accounts or even certain contracts differently. With the ability to categorize each valuation record to a different account, W Energy Software has streamlined the ability to handle revenue recognition. W Energy Software continuously refreshes our knowledge of ASC 606 and other GAAP standards to ensure that new accounting requirements are implemented into our ERP product. The Status Quo is waiting on end-users to request functionality/development to accommodate ASC 606 regulations. In fact, other companies have taken no steps to proactively comply with Revenue Recognition requirements for midstream companies.
One-Click Regulatory Reporting
As we’ve seen, users of legacy plant accounting software are relegated in many situations to using Excel to manually manipulate financial data. This extends to preparing state-specific regulatory filings. However, working outside your financial tools can create uncertainty and compliance risk. That’s why W Energy Software even offers out-of-the-box state regulatory reporting, eliminating the time and risk of manual preparation.
When selecting a plant accounting software solution, make sure you’ll be able to quickly answer how something was calculated, account for ASC 606, and avoid any sort of “black box” that makes auditing more painful and costly.
Ready to learn more? Let’s talk.
This is part 6 of a 7-part series. Read part 7 here.
|Blake Fraley, Director of Midstream Implementation Earning a B.S. in Management of Information Systems from Oklahoma State University, Blake started his career with Deloitte Consulting where he worked as a software developer using SAP, report developer, and PMO support. Joining our team in 2012, Blake was the first implementation consultant and helped start the Midstream team. He loves helping clients make a complicated industry easier using the W Energy Software suite of products. Blake enjoys traveling with his family and almost has as much energy as his two young daughters.