Case Study: Financial Close Controls Audit for a Mid-Market Manufacturer
Compressing a 22-day monthly close through process mapping, critical-path analysis and control redesign
Executive Mandate Summary
Key Transaction & Governance Challenges
- •The financial close had evolved without formal process mapping or defined dependencies.
- •18 of the 22 close days were consumed by dependent activities.
- •Bank, intercompany and inventory processes relied heavily on manual intervention.
- •Independent activities were being performed sequentially, extending the overall close cycle.
Northrop Execution Architecture & Methodology
Executive Mandate Overview
A ₹72 crore auto components manufacturer engaged Northrop to diagnose a slow financial close process. The monthly close required 22 days and the annual close 45 days, limiting the usefulness of management reporting.
The Central Issue
The close process had developed organically, with reconciliations, inventory adjustments, intercompany entries and management reviews performed in a largely sequential manner. Dependencies and bottlenecks had not been formally mapped.
Northrop Diagnostic
Northrop mapped 34 activities and analysed their dependencies to establish the critical path. Three activities—bank reconciliation, intercompany reconciliation and inventory valuation—accounted for 11 of the 18 critical-path days.
Process Compression
Bank reconciliation was shifted toward daily processing, intercompany submissions were standardised, elimination entries were automated and inventory counting was moved to Day -1. Independent activities were simultaneously re-sequenced.
Verifiable Institutional Outcomes & Value Realized
- Down from 22 days within three months.
- Management received financial information substantially earlier in the reporting cycle.
- Down from 45 days through stronger monthly close discipline.
- Time previously consumed by close execution became available for analysis and planning.
Pratham Sharma
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