Swedish-based multinational Svenska Cellulosa Aktiebolaget (SCA) produces and sells hygiene products, packaging solutions and a range of forest products. Over the past decade SCA has experienced rapid growth through a large number of acquisitions. This rapid growth is leading to globalisation of operations and the company now has ever-increasing numbers of employees in a growing number of countries.
SCA decided to implement IAS 19 (see box) back in 1998 to help the human resources and finance departments manage employee benefits actively from a global perspective. This put SCA well ahead of its European counterparts in the trend towards market-based accounting standards.
SCA has taken an innovative approach to the the process challenges that have arisen as it applied IAS 19 around the world and across its businesses.
SCA faced some key process challenges. The company is made up of different business areas that have markedly different cultures and processes. The IAS 19 process needs to be flexible enough to allow for such differences. It is also increasing its global reach and in doing so, is entering new countries or expanding in previously insignificant countries, meaning that the numbers of plans included in the IAS 19 process are also increasing. Some smaller plans have also recently been included, which allows SCA to understand better and manage the risks associated with its benefits plans and to increase the degree of consistency.
This means that not only is there a greater workload in all countries for all material plans but these are often subject to tight deadlines for year-end reporting. In some countries, IAS 19 or similar figures need to be produced to satisfy local requirements. So not only has the number of plans included under IAS 19 increased but so too has the workload and all of this in a drastically reduced time frame. And, at local level, everyone involved in the new process must understand not only the key technical aspects of IAS 19 but also what they need to do and by when.
Finally, SCA had to develop a precise project plan, with detailed tasks, deadlines and responsibilities.
As this list of process challenges shows, the implementation and management of IAS 19 and the other accounting standards have the potential to soak up an enormous amount of management time, something SCA was anxious to prevent. Another goal was to make efficient use of the internal communication channels in place within SCA.
To meet these challenges, SCA with the help of Towers Perrin developed an IAS 19 intranet site. The site contains a detailed timeline of all necessary actions. It lists the key roles and responsibilities of human resources and finance management in the relevant countries and business groups. It also contains a detailed section on the technical aspects of IAS 19, which also acts as a useful refresher in key terminology and concepts to local management following training on IAS19.
The site can easily be updated by corporate management to reflect any changes in approach or timing. This makes it easier to integrate acquisitions into the process, and provides guidance for dealing with special event accounting (for example, following an acquisition or change to a benefit plan).
The web site was first used for the year-end 2000 exercise, and has just been used again at year-end 2001. Usage of the site has been increasing gradually since its implementation. There have been several measurable benefits to the company. Local management has improved its knowledge and understanding of IAS 19.
This has resulted in a simplified and more efficient IAS 19 process. There has also been a significant reduction in the time spent by corporate management in answering technical questions and clarifying the process, roles, responsibilities and deadlines,
Use of the website has freed up time for management to focus effort on the trickier issues, and to use the information generated to add value to the company – a key IAS 19 goal for SCA.
Implementation and ongoing application of IAS 19 (or indeed any of the new accounting standards) is an onerous task for companies with international operations. Project management and co-ordination are critical. One element of meeting this challenge is a web-based intranet site that firstly provides information and guidance on the technical aspects of implementation and secondly describes process aspects of roles, responsibilities and deadlines so that finance and human resources management in all locations can act in a coordinated and consistent way. This increases the efficiency and effectiveness of IAS 19 and leads to the prompt actions that generate added value and make IAS 19 a valuable business tool rather than merely a compliance exercise.
Christine Larmer is a senior consultant with Towers Perrin in London and Richard Barker is with SCA

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