Automated Loan Accounting System for Leading Education Funding Provider Reduces Labor Costs
Project at a Glance
RDA developed a loan accounting system for a leading education funding provider that replaced a labor intensive, non-standardized process. The new system automated nearly 90% of the workflow process – reducing labor costs while providing a solid, detailed audit trail that complies with both Sarbanes-Oxley and SEC filing requirements.
About Our Client
RDA’s client provides federally guaranteed student loans originated under the Federal Family Education Loan Program, and offers comprehensive information and resources to assist students, parents and guidance professionals with the financial aid process. Our client currently owns or manages student loans for eight million borrowers, and employs 10,000 individuals at offices nationwide.
Background
Our client needed to significantly reduce the time it takes them to close their books at the end of accounting periods. This pressure came from both Sarbanes-Oxley and the reduced reporting deadlines mandated by the SEC. A major bottleneck in reducing the time to close was associated with creating some complex journal entries related to their loan accounting. In order to solve this problem, our client required a customized system. Prior to this project, they relied upon multiple Access databases that were manipulated using Excel spreadsheets, with no standardized process and a flawed, incomplete audit trail. The solution had to be in production for the year end close, so an on-time delivery was essential.
Initially, our client engaged a large system integrator to do this work. That integrator spent a significant amount of time doing analysis with a large team. Because of dissatisfaction with the time and cost the integrator had estimated to complete the work, our client terminated their relationship and asked RDA to propose for the project. Our team was able to complete the system within their deadline of nine months and come in under budget at a figure significantly lower than the system integrator had quoted.
Solution Detail
The RDA team provided initial analysis services and worked with our client’s IT specialists to completely rewrite the existing documentation for the project. In addition, we partnered with their accountants to develop the business rules for general processing. Working together enabled the RDA team to identify how our client wanted to view and merge all of the data, their preferred design for the finalized journal entries, and characteristics for the raw system data.
The Loan Accounting System (LAS) captures data from multiple groups within the organization and third parties. The data is placed into a worksheet format that allows it to be merged, reviewed, summarized and aggregated. The information is eventually transferred into journal entries for a general ledger and uploaded into PeopleSoft, our client’s official general ledger accounting system of record.
LAS organizes and automates the workflow process. Tailored to the specific needs and shape of our client’s organization, the new system is both accurate and auditable for full Sarbanes-Oxley compliance.
Benefits
The new system is highly efficient, automating nearly 90% of the workflow process. Prior to the Loan Accounting System, a typical close period lasted five days, with everyone in the organization working 12 hours per day. Since LAS, the most recent close took only three days, and employees were able to go home on time.
LAS also provides a solid, detailed audit trail that enables our client to comply with Sarbanes-Oxley legislation and SEC filing requirements without additional work introduced into their regular process.
Challenges
This solution needed to be delivered within a very tight timeframe. RDA’s iterative development model allowed programmers to begin working on the system months before all of the accounting rules were finalized. This allowed our team to incorporate changes to the system requirements on the fly, without wasting time backtracking.
Customizing the solution to meet the detailed workflow and audit needs of a large organization required our team to work closely with various divisions to gain a big picture perspective of the entire process from start to finish. The system manages approximately 300,000 records per month, but tracking the process for auditing purposes inflates this number to over two million records per month.
Technically Speaking
The system uses Oracle for its backend database and Infomatica for data capture, Rational XDE for object oriented modeling, ADO.NET for data access, and WinForm C# for its user interface. The development language used was C#.