OAK BROOK, Ill., June 21, 2011 /PRNewswire/ -- Public retirement fund leaders face growing pressure to reduce costs while providing a high level of service and transparency. According to Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S., one way to do this is for public retirement fund leaders to review their current financial system to ensure it is the appropriate size for their organization.
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Financial management systems, or enterprise resource planning (ERP) systems, consolidate business operations into a uniform software system. According to Brent Ehrman, a principal in the Government group of Crowe's Performance practice, during the 1990s, consistent retirement fund profits led some leaders to purchase expansive, high-end financial management systems. As Ehrman explained, these were expensive, required significant training for users and often went far beyond what the organization needed at the time. Other funds continued using obsolete legacy systems despite their limited flexibility and high maintenance costs.
"Many retirement funds have been waiting for the economy to improve before addressing the shortcomings of their current systems, such as significant annual software maintenance fees or inability to quickly access critical financial information," Ehrman said. "We recently worked with a state retirement fund that was paying approximately $1 million in annual maintenance fees for its system. We implemented a new system that costs 90 percent less than what they were previously paying."
Ehrman notes that a financial management system for public retirement funds should meet the following criteria:
- Provides clear return on investment (ROI). Tight budgets and heightened scrutiny for discretionary spending dictate that clear justification is needed for any new information technology (IT) project. Leaders looking to implement a new financial management system must calculate the ROI as well as how long it will take to recoup the investment.
- Accommodates large transaction volume. Since public retirement systems receive payments from organizations that handle payroll from many different sources, the financial management system should have a record of reliability and provide transparency and accuracy.
- Integrates seamlessly with other systems. To deliver productivity gains, a financial management system should easily interface with other key systems, such as pension and investment management systems.
- Provides efficient reporting and compliance. To fulfill regular reporting requirements, a financial management system should make it easy to gain access to information required for compliance reporting or to support management decisions.
- Maintains data security and privacy. Since retirement funds receive transactions from multiple parties and must produce information for a range of stakeholders, their financial management system needs the proper security and controls to protect information, avoid security breaches and maintain public confidence.
- Is not too big. High-end financial management systems often require significant configuration and customization to address the needs of public retirement funds. Also, since their user interface isn't always intuitive, employees must undergo significant training to learn the system. These high-end systems also often come with high annual maintenance costs and upgrade fees.
- Is not too small. Some funds still operate stand-alone, PC-based systems, which require considerable staff time and resources to gather and manually enter information from disparate systems and data bases. These systems are often not capable of satisfying the expanding needs of today's retirement fund agencies.
For more information on Crowe's financial management services for retirement funds or case studies and analysis to help justify operational improvement initiatives, please visit: www.crowehorwath.com/prs.
About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting and consulting firms in the United States. Under its core purpose of "Building Value with Values®," Crowe assists public and private company clients in reaching their goals through audit, tax, advisory, risk and performance services. With 26 offices and 2,400 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest networks in the world, consisting of more than 140 independent accounting and management consulting firms with offices in more than 400 cities around the world.
SOURCE Crowe Horwath LLP
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