The CIA

16/3/2013

The internal audit at Janssen is taken just as seriously, if not more seriously than our external audit. Due to some concerns expressed in the prior internal audit there was pressure on the Finance team to satisfactorily pass the audit without much noise and fuss so no doubt during the three week period the mountain of stress crept towards the sky and nearly exploded. In preparation for this audit from America I was in charge of compiling the majority of the internal documents required by the auditors prior to their arrival. This included compiling work from essentially everyone on the team: the management accountant manager, commercial analyst, the graduate, the senior financial accountant and so on. One of the things that I was acutely aware of when I was carrying out my task was that I, who basically knew next to nothing about the internal workings of Janssen, was constantly badgering (to a reasonable degree I hope) for the final products of my more senior colleagues. I was happy asking for a timeframe via email in which they thought they would able to complete their task by but when those deadlines were not met I had to try another form of communication i.e. paying a visit to their desks. However I was conflicted between getting my task done in time for the internal audit which meant that i had to give regular reminders and keep pestering people for work to be done which could have caused annoyance within the team but at the same time I felt it not so right for someone in my position to continually ask how they’re going with their work or how close they are to completing it, afterall they’re all busy people and I’d much prefer if no one was frustrated with me. In the end I decided that getting the job done was priority and that it is through maintaining good friendly relationships that people are willing to get the work done for you. So learning more about the other person, their circumstances and showing your appreciation for the work they have done for you is the key to getting people to help you I believe.

Fortunately we passed the internal audit quite successfully and in celebration there was a hearty company lunch at ‘Ribs and Rumps’ (and as luck would have it, it just happened to land on my uni day so I missed out and lunched with them in spirit instead). The other thing that i saw emerge from this is Janssen’s culture of encouragement and acknowledgement. For those that worked long and hard and sweated tears there were encore awards ranging from (bronze to platinum) each with their little monetary bonus. I found it a lovely gesture to recognize the people who willingly worked long after the sun had set and went out of their way to help others. So far that’s just one part of Janssen’s culture that I admire and believe to be a fantastic idea to motivate and encourage employees.

The External Audit

9/3/2013

With both external and internal audits scheduled right after year-end there has been no down time as we dive straight into preparing for what is needed for when our friends, the PwC auditors, come in and hassle us with a multitude of questions in regards to our accounting system. It was a completely new experience for me to be in the shoes of someone being audited as opposed to my prior position as an auditor. From this new perspective I could understand a little more clearly the exasperated sighs of clients as an auditor came back question after question.

One of the main tasks assigned to me for this audit was to find out whether invoices paid out in January relating to 2012 work was correctly accrued in December. This in turn would help verify that our P/L statement for 2012 was a correct and fair representation of what happened in that year. However this turned out to be an arduous and tedious task because there was nothing to show in SAP whether invoices paid out in January and beyond related to 2012. The only way we could confirm that was to go through all the invoices processed in the early months of 2013 and determine manually which of them related to 2012 work. Sometimes it involved getting into contact with the person who had created the Purchase Order (PO) for the expensed item and to clarify with them whether it was 2012 or 2013-related work but this almost always resulted in a time lag as responses are hardly ever immediate. As hundreds of invoices are processed monthly this task seemed almost impossible so I sat, scratching my head, trying to generate ideas that would allow me to complete the task in significantly less time but to no avail. I was feeling quite defeated and stressed at that time so I finally decided to seek advice from one of our grads and the advice she gave me was to go back to our Financial Controller and discuss it with her. After discussing my problem with the FC and seeing the impracticality of the task at hand, she introduced a materiality bracket which meant I’d only have to go over invoices that are of a significant amount. After sharing my worries I felt much more refreshed and eager to get back to work since my goal felt much more achievable. If I had shared my issues and explained my problem earlier I may have saved myself some stress. Not only that but from that task, I’ve also learnt that asking for advice is a good first step for when you’re stuck in the mud!

Finance Organisational Chart

Here is an organisational chart of my finance team illustrating the smaller teams we branch into and the individual roles that we hold to create our finance family. It also depicts the hierarchical structure of who reports to who with our VP of Finance in charge all the way down to us interns.

Accuracy

28/2/2013

An interesting system that we use to extract and create useful information from SAP for management accounting is a system called TM1 which feeds directly from SAP but all additional information added into there is recorded a day later in TM1. TM1 consists of various ‘cubes’ which are like pivot tables customised accordingly to what information you want to extract from SAP. It’s greatly useful for stats, reporting and planning and an essential tool for decision-making. However sometimes there are defects in TM1 and not all the information from SAP gets transferred to TM1. To fix any of these errors I do weekly checks against accounts such as the sales ledger to see if there are any amounts missing in TM1 that are in SAP. As all statistics and data on how Janssen is performing is based on TM1 it is essential that these amounts are right so managers can make correct judgments and decisions. In the case that there are discrepancies between TM1 and SAP we can see that small mistakes in figures can potentially lead to large, consequential decisions when these numbers are translated elsewhere. Therefore the need to be accurate and prudent in one’s work is essential because they could otherwise create unintended consequences. 

BSG (Business Solutions Group) Conference

20/2/2013

This was one of my most amazing and fun experiences related to work. The BSG Conference was held over two days at Terrigal and involved everyone from Finance, IT and Support staying overnight at the Crowne Plaza to learn more about each other and our company. Right before the conference, everyone was required to do the StrengthsFinder 2.0 Survey to discover our top 5 strengths. This included doing approximately 72 timed questions which probed into our personality and the final product was a summary of our top 5 strengths which we needed in preparation for the conference. The purpose of this exercise was to find out where our strengths and those of our team members lie so that we can leverage upon them and create synergy for more efficient and effective outcomes at work.

The first day at the conference was filled with team-building activities where we were split into smaller teams and mentally and physically challenged. We had puzzles similar to those we had at leadership camp like the Tower of Hanoi and we were on a timed mission to dress up as a superhero and do a presentation of their strengths and weaknesses while simultaneously on a scavenger hunt. It was during those activities that everyone shared their past personal experiences, communicated their ideas and opinions and worked together as one and it was then that I felt integrated and part of the family despite everyone being of different cultures and ages.

The second day we focused on building and leading with our strengths. A report was produced for each department showing how many people from that department had a particular strength. What I learnt from our guest speaker who talked to us about our Top 5 strengths was that the purpose of the report was for us to become more aware of what we can excel at and to acknowledge and play to our strengths rather than focusing on our weaknesses. Of course that is not to say that we forget about our weaknesses but to recognise how we can use what we are already good at in our work and personal lives. An activity which I found really accentuated people’s strong qualities was when we went around in a circle identifying a particular individual’s strength and having others reflect and share how their strengths have evidently come into play at work. This was another way we got to get-to-know people and their personalities better which in turn helped to form tighter bonds between us.

This conference was invaluable because it helped create stronger, more personal relationships between people in our team and in other departments. It is through knowing people on a more personal level that we are able to work more cohesively and efficiently through trust, smoother communication and mutual understanding. 

Showing me the Ropes

8/2/2013

As year-end came to a close the workload got heavier for me as the UNSW intern before me, who is currently working part-time, came back from his holiday and was able to show me the ropes. He was able to handover some of the tasks he had completed as an intern and some of them included doing quarterly ABS surveys for the company, distributing the daily mail, drafting up the monthly balance sheet, compiling all the recs and journals done by FLDP graduates, managers and management accountants, coding invoices and preparing journals to be posted into our accounting system SAP by our accounts payable amongst other ad hoc work. My accounting 1A knowledge helped me with preparing journals for invoices that needed to be paid out because I had to understand both sides of the accounting equation which involved debiting an expense and crediting an accounts payable ledger. These tasks seemed relatively simple but it involved a lot of different steps, a lot of documentation and the compilation of information from an array of sources. He explained everything clearly and I found that he was able to remember the processes and steps to each task so well because he made a manual for the majority of his tasks, as something to refer to if he ever got lost. Learning from others and picking up on of their good habits will definitely help with self-improvement and progress and that’s something I learnt and was able to adopt.

Another thing I discovered is that sometimes when someone shows you how to do something you may have understood what they have done but when it comes to doing it yourself it’s different if you haven’t had a go at it and sometimes I find myself needing to ask a second time about how I should get something done. Going forwards I believe that to cement what I’ve been told to do I should just go through a brief summary of what I need to do at the very end and actually make sure I know what I’m doing so there only needs to be one explanation. 

New people, New team, New beginning.

18/1/2013

Given my limited interaction in the corporate world from the prior year as a cadet I had a fair idea of what to expect in terms of the required etiquette, what it would feel like to be in an office environment, whether I’d be sitting in a pod or hotdesking, and the more than likely (familiar) numbing sensation of one’s behind when you sit for an hour too long (which, by the way, I have effectively countered through numerous hourly trips to the kitchen to replenish and hydrate my body with water).

Just a bit of background, Johnson & Johnsons consists of Medical, Janssen (the Pharmaceutical affiliate) and Consumer. Both Medical and Janssen reside in Macquarie Park with Medical being the big, red, brick building we toured during our site visit while Consumer can be found in Ultimo. All UTS Bacc co-ops intern at Medical while UNSW co-ops can be found directly across the road from the big, red, brick building at Janssen. Truthfully, I was quite nervous about how well I’d integrate into my new team and I could feel the nerves getting to me on my first morning but when I was warmly greeted by my bright, talkative manager I couldn’t help but just smile widely and relax. She introduced me to the finance team of approximately 10, divided further into three different groups for management accounting, financial accounting and reporting and planning. For the next six months, I was to work with my manager in reporting and planning on jobs yet to be defined but they would be given to me when they found something suitable.

As the first week passed quietly I had gradually come to the conclusion that I may have started my internship at an inconvenient time for my team. One of the characteristics of Johnson & Johnsons as outlined in my previous post is that they are a US company and therefore their year end is 31 December. Coming in on the 2^nd January meant that there was a substantial amount of pressure on current employees to finish their designated tasks so that unfortunately left me with not much work or the kind of work that required little explanation as time was of the essence. Please don’t be mistaken, I was very grateful for whatever work I could get and after the first few days I became great friends with the printer and scanner. Looking on the bright side it was a great way to meet new people as the printer was located in a corner of our kitchen and I’d bump into all sorts of people from different departments such as customer service, business intelligence and IT and get to know them. The overall lesson I learnt here is to make the most of your opportunities and turn what may seem to be a dull and monotonous task into something more valuable and fun.

Another issue I puzzled over during this time was when and how often to ask for work to do. As I was not given any set tasks except to help out whenever I could I was always running out of things to do. I did not want to be sitting idly at my desk twiddling my thumbs but neither did I want to be constantly pestering my teammates for work especially when they were trying to meet deadlines and had their ‘heads down bums up’ as the saying goes in the office. So I thought the best approach would be just to ask each person on my team once a day at the beginning if there was anything I could help out with and if they didn’t have anything at that moment in time I let them know I would be free to lend a hand when they needed it. However I do wonder if there was another way I could’ve tackled that...

Introducing Johnson & Johnson (J&J)

11/1/2013

Apologies for the delay in the making of this blog; this is a first for me so I’m fumbling with the wheels but I’m eager and interested to know where my accumulated reflections upon my first industry experience will take me and what you think of them. I’ll be posting up the journal recounts that I have recorded relating to my experience thus far so please feel free to read and join in with comments, queries or whatever tickles your curiosity.

I thought I would start off by laying the foundation and giving a brief insight into what exactly Johnson & Johnson, more famously known for their baby products, can do and their breadth of capabilities. Products made by Johnson & Johnson are frequently perceived to be limited to those which are often seen on ads, catalogues and on the shelves of your local woollies supermarket, known as fast-moving-consumer-goods (FMCGs) but this is quite deceptive and misleading as they produce just as many medical and pharmaceutical products as consumer goods, if not more.

A sneak peak into my IT1 Pre-Placement Sponsor Organisation Analysis will give a better idea of the industry J&J is a part of:

1.      Nature of industry and its economic significance

Johnson & Johnson (J&J) is one of the world’s most comprehensive and broadly based health care companies, operating not only in the consumer health care industry but also the medical equipment and pharmaceutical industry. They provide a range of different products and essentials to hospitals, doctors, patients and the everyday consumer. Products sold to doctors and hospitals pertain to the array of procedures and methods that address the medical needs of people, thereby indirectly affecting the wellbeing of many around the world.

2.      Main participants in the industry, market concentration, products

Major competitors in the medical equipment and supplies manufacturing industry include companies like Baxter International, Boston Scientific and Medtronic. Other competitors are Pfizer, Novartis, AstraZeneca and MSD.  As demand is driven by population demographics and advances in medical knowledge and technology, profitability is dependent on the ability to produce superior goods. Large organizations like J&J are able to achieve economies of scale in manufacturing and R&D while small companies can specialize in a particular market sector.

3.   Accounting issues relevant to the industry

There are two main accounting issues relevant to this industry. As J&J is listed on the New York Stock Exchange (NYSE), all affiliates of J&J are required to report against US GAAP. However as different accounting standards have been adopted in different countries there have been many difficulties and issues arising from the reconciliation of the domestic country’s reporting requirements and US GAAP. Initiatives to address this has been to conduct certified internal audits (CIA) by the US once every three years to regulate compliance and consistency of accounting methods across the world.

A second accounting issue relates to the rebates and subsidies received from the government and the method of disclosing this information along with returns and allowances. There have been many complexities and issues with applying rebates to products as their discount varies from product to product. Returns and allowances give rise to classification issues on the BS and PL. One of the reasons for this is because if a surgeon orders medical equipment of a particular size, J&J must deliver not only the requested size but 2-3 sizes above and below that as well to guard against any miscalculations that may only be realized during surgery. The equipment that is unused is returned but the amount is unknown until received.

4.    Key challenges, issues and developments facing the industry and the accounting profession

One of the developments being encouraged at J&J is a well-balanced life style through the implementation of a decentralized management system and the honouring of a credo which atypically acknowledges that our first responsibility is to our customers and then our shareholders.

A key challenge facing the industry relates to the demographical nature of Australia. A trend of this industry is that it has been consistently growing due to the increase in the aging population across the world. There are more people getting old then there are being born and this means that the number young people who are qualified to care for the elderly are becoming increasingly scarce with continually new illnesses to combat.