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Accountant at Work

Controls Uplift


Client Profile:

A subsidiary of the Canadian multinational bank is the seventh-largest U.S. bank by deposits and the 9th largest bank in the United States by total assets.

Client Challenge:

A top 10 financial services company in North America, made a $6.3 billion acquisition of the operations, loan portfolio, and other assets of a former US auto finance unit.  As a result, they became a top 5 bank-owned auto lender in North America and significantly grew their presence in the US market.  The acquisition created accelerated growth in their consumer loan portfolio via an organic growth platform while increasing the diversification of their lending portfolio.

Our client desired to leverage the acquired company’s processes and technology.  However, to operate within the client’s limited risk appetite and in compliance with the highly regulated, stringent oversight environment of the banking industry, a major uplift of their information technology controls was needed.

An assessment of the existing environment resulted in the identification of 464 IT control gaps with an estimated cost of $15 million to remediate.  The operating expenses related to the acquisition were subject to a favorable accounting treatment for a limited time period and approximately half of the time had already been lost with limited progress.  Therefore, as a result of the funding arrangement and the desire to decrease the risk quickly, it was important to effectively resolve the gaps in a timely manner.

Management brought in Herndonwood to manage the resolution of the gaps because they understood the need to supplement existing staff, obtain missing skills, act quickly, and create structure around the process.


Approach & Solution:

Our services included:

  • Validation of the identified gaps and assessment of their associated risks

  • Identification and documentation of existing compensating controls

  • Design solutions for resolution of the gaps

  • Documentation and approval of 300+ remediation plans

  • Creation of six major projects for the most complex and costly resolutions and dozens of smaller projects for the remaining work

  • Development of program management structures, processes, tools, and reports

  • Program management including:

  • Creation and facilitation of a formal program steering committee and a council for urgent issues

  • Representation on numerous standing committees

  • Funding request development and submission, budget maintenance, forecasting, and reporting of expenditures and variances

  • Acquisition of capital equipment and licenses

  • Procurement of implementation services and on-going outsourced services

  • Detailed task, status, and schedule tracking at the milestone and remediation plan levels

  • Assessment and management of the interdependencies between all of the remediation activities

  • Communication management and reporting to all levels of the organization

  • Risk, issue, and change management

  • Coordination with the EPMO to assure compliance with corporate processes

  • Project management for half of the projects and oversight of client provided PMs for the remaining projects

  • Management and development of the evidence submission process

  • Evaluation and approval of the evidence

  • Formal closure of the gaps

Business Impact:

Herndonwood successfully managed the resolution of the gaps, reducing risk in a timely and effective manner, and allowing the client to take advantage of the favorable accounting treatment for associated expenses.  As a result of the program, Herndonwood positioned the client with enhanced platforms and tools for future growth.  This was accomplished within 18 months and was under budget by more than 20%, resulting in savings of about $3.5 million over expected expenditures.

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