Shipbuilder Chantiers de l’Atlantique made use of Runview’s services to check that its processes are operating properly. The audits enabled its accounting staff to pinpoint areas for improvement, while also revealing a very low level of anomalies. All achieved at no cost to the shipbuilding firm, and very little time spent working with Runview consultants.
“When handling large numbers of invoices, errors will obviously be made,” acknowledges Thierry Pralong, Head of the Accounting Department at Chantiers de l’Atlantique. For this pragmatic professional, the issue is to be able to pinpoint these errors, correct them and find the areas requiring improvement, while measuring process performance. A recovery audit conducted on accounts payable enables these requirements to be met.
A leading light of French manufacturing, Chantiers de l’Atlantique, based in Saint-Nazaire, is one of the world’s largest shipbuilders. The Brittany shipyards have been building ocean liners for 150 years and have consequently seen the birth of iconic vessels such as the Normandy and Harmony of the Seas. They deliver about two ships per year. The company has also diversified into constructing naval vessels, and is expected to build the French Navy’s next aircraft carrier. It is also positioned in the marine renewable energy sector, building offshore power stations generating energy from offshore wind turbines. Chantiers de l’Atlantique’s turnover is €1.7 billion and it has 3,200 employees.
For a business like this, the accounts payable function is of particular importance. “80% of our added value arises either from materials purchasing or from subcontracting,” Thierry Pralong explains. As a result, the Accounting Department processes some 80,000 invoices per year, from some 5,000 different suppliers. “We operate a permanent control process,” says the Head of Accounting, who conducts spot-checks using Excel. However, given the volume of transactions, the accounts team is not really in a position to undertake truly comprehensive checks. “We know that our analyses are limited and we have neither the time nor systems, and we probably lack the skills, to conduct a real audit.” Which is why Chantiers de l’Atlantique opted to make use of Runview’s services.
A first audit assignment was carried out in 2014. “At the time, Runview was the only firm offering this type of service, and its payment-by-results remuneration meant we could start an audit with no cost commitment, which suited us very nicely,” Thierry Pralong recalls. The objective at the time was to evaluate the level of errors, including in terms of double payments to suppliers. “We knew it was an area of risk, but we were unable to measure the performance of our processes,” he says. The Head of Accounting was generally reassured by the audit while some weak spots were identified, including invoices without orders, an aspect on which staff were then able to work.
In 2019, Chantiers de l’Atlantique wanted to repeat the exercise. Meanwhile, the company had changed its ERP system and switched to SAP. “We had upgraded our IT systems and, looking back on the implementation of the new ERP system, we wanted to ratify this development and confirm that the processes were sound,” explains Thierry Pralong. Hence the audit for which Runview was appointed focussed on double payments for fiscal years 2014 to 2018, and on overlooked lost deductible VAT for 2017 and 2018.
According to Thierry Pralong, the notion that best sums up Runview’s contribution is “simplicity”, in the positive sense of the word. “An e-mail conversation took place at the start of the assignment. Subsequently, the consultants relied heavily on the Fichier des Écritures Comptables [a statutory requirement in France for tax purposes] for the years in question, which we already had available because we generate them every year. In terms of data, there was therefore not much to prepare, we just needed to send these files,” he explains. Runview reviewed the files sent using its own algorithms and data-mining software, which together performed an exhaustive analysis of the accounts entries.
Thierry Pralong, Head of the Accounting Department at Chantiers de l’Atlantique
The important thing for us is to understand how anomalies occurred so that we can correct matters in future.
Runview then checked the anomalies found by consulting the supporting documentation. In the case of Chantiers de l’Atlantique, this stage was also conducted remotely. “We gave Runview’s consultants access to our SAP accounting system, and to Esker, our invoice archiving system. They then worked completely independently,” Pralong reports approvingly, very satisfied with the short amount of time spent by his staff relative to the benefits obtained from the audit.
The consultants also conducted circularisations with approximately 90 of the shipbuilder’s selected suppliers. The suppliers all agreed to provide the necessary information to Runview staff.
The analysis results were made available to Chantiers de l’Atlantique via a dedicated web platform, giving details about the discrepancies found and thereby enabling the shipbuilding company to ratify them. “You can look at them whenever you wish. The platform is simple, interactive and efficient,” says Thierry Pralong, who appreciates the ability to drill down from the analysis results to find the cause of anomalies. “The important thing for us is to understand how they occurred so that we can correct matters in future,” he explains.
In the event, the audit findings were mainly reassuring to Chantiers de l’Atlantique, showing that the accounting department is performing very well. While the anomalies found involved relatively small amounts, the analyses nevertheless made it possible to pinpoint a new area for improvement. “We realised that many credit notes issued by our suppliers had not been passed on to us. We will therefore try to improve on this point,” the Head of the Accounting Department explains.
Besides the invaluable information provided by the analysis findings, Thierry Pralong has factual, quantified information ready for internal communication. “We made use of the spreadsheets supplied by Runview to congratulate our colleagues on their work, and we escalated the information to senior financial management and the board,” he says. The figures providing a comparison with the levels typically found in the same industry emphasise how well Chantiers de l’Atlantique’s accounts processes work. It must be said that the shipbuilder’s level of double payments is just 0.000005% compared with an average of 0.002% in the industry, and 0.0000003% compared with 0.01% for VAT-related discrepancies. “This gives us credibility and means we have confirmed that in most cases our processes are very good. And it is experts in the field who say so!” Thierry Pralong is pleased to relate.
He believes conducting audits of this type is of genuine benefit. “Ultimately, several billion euros worth of purchasing was analysed. While we undertake macro analysis, Runview’s methodology is much more valuable. It’s always good to have an outside expert opinion about your processes,” he states. Chantiers de l’Atlantique therefore now plans to conduct regular audits to ensure that their processes remain just as effective in future.
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