Case Studies

Asset Management: Case Study

Fund Accounting System Version Upgrade and European Savings Tax Directive implementation



The Issue

In order to comply with the requirements of the European Directive on taxation of savings income in the form of interest payments ("EUSD"), which became effective as of 1st July 2005, and to upgrade the current version of its fund accounting platform (including a wide range of new functionalities), a major fund administrator initiated a project aiming at enhancing its operational environment. This project was considered particularly challenging, as it required operational, systems, regulatory and fiscal expertise. The scope of the project included issues such as the treatment of German and Austrian taxes.

The major issues were the following:

  • Perform an impact analysis of the new regulation,
  • Document specifications to be developed by the IT provider,
  • Test the new version of the system adjusted to EUSD requirements,
  • Test all new functionalities,
  • Identify new processes to be implemented and adapt the organization to those changes,
  • Migrate to the new version of the system,
  • Train employees on the different regulatory issues and on the new system functionalities.

Our Approach

The client was looking to benefit from our extensive experience in managing fund administration-related projects gained in several systems implementations, version upgrades and business process reviews. A joint team composed of both internal and external specialists in fund accounting, systems, EUSD as well as German and Austrian tax was therefore created. The objective of this approach was to propose an optimal project structure to reduce the risk level in a very complex project and to save time, cost and coordination efforts as well as to train the client's staff to our approach of such projects. In that respect, our experts were in charge of project management.

During the first phase, we analyzed the specific impacts of the EUSD on the client business, we documented the system specifications and we prepared the scenarios for the tests. To do so, we relied particularly on:

  • Our knowledge of tax issues,
  • Our knowledge of the client's organization,
  • Our knowledge of the fund accounting business and of specific systems,
  • Our project management expertise,
  • Practical experience of the project team members in analyzing complex issues and in documenting specifications for an IT provider.

The second phase consisted mainly in system parameterization and testing as well as training of client staff. Using the test scenarios defined in the first project phase, the system was challenged intensively in order to ensure that:

  • The new version could meet all expectations with regard to performance and accuracy;
  • The functions relating to the EUSD requirements were properly implemented and the calculations were performed accordingly;
  • The functions relating to the German and Austrian taxes were properly implemented and the calculations were performed accordingly;
  • The new functionalities were delivering the expected results.

Identified problems were immediately reported to the system provider and followed up on.

The last phase consisted mainly in:

  • Re-defining the processes,
  • Defining the controls,
  • Creating and documenting new procedures,
  • Training the client's staff.

The Outcome

The outcome of the project was a successful and timely implementation of a new release of the system including all new functionalities enabling the client to work more efficiently, to propose new products and to fulfil all tax and regulatory requirements.