Unwrapping the secrets of world-class SEC reporting with Jonathan Gregory at Hershey Co. - Part Two
It takes more than efficient processes and state-of-the-art technology to produce a world-class external reporting function. Jonathan Gregory, Director, External Reporting and Technical Accounting at Hershey Co. draws from his deep experience as a practitioner to generously share his thought leadership with the SEC Professionals Group.
He is co-chair of the SEC Professionals Group Disclosure Effectiveness Committee, which meets on May 20. Jonathan also is leading an SEC Pro Group webinar on June 29 about adopting and implementing new technologies.
In the second part of our extended conversation with Jonathan, he offered up insights into the intangible factors that drive innovation and high-performance in SEC reporting.
Q: Your favorite Hershey chocolate?
Definitely KitKat! For more than 40 years, the KitKat tagline has been ‘Have a break, have a KitKat.’ It’s definitely relevant during this time when people are working from home.
Q: Big company, big team, yes?
Wow, if only! My team is just three people, and very much on the lean side given the scope of what we do. External reporting is only one of our responsibilities. We’re also responsible for technical accounting research, analyses and impact, performance benchmarking, and evaluating new technology. Many companies maintain separate teams for external reporting and technical accounting.
As a Hershey Company Center of Excellence, we’re responsible for creating best-of-class knowledge and competency in our business area on behalf of the entire organization.
For example, most of the complex accounting issues that need to be analyzed flow through my team. As a Center of Excellence, we take the lead on thought leadership about new accounting rules and emerging SEC disclosure and filing issues. When a new accounting rule is released, our team will do the research and consult with colleagues across the company to understand what it means for our business. Our deliverable is to develop a point of view and recommended best practices for accounting treatment. This will go out to the business units or will be disseminated through global shared services.
Q: You seem to be pretty tech savvy. What are your criteria for choosing new technology?
Overall, the team is pretty technically proficient. We use SAP/Central Finance for consolidation, Blackline for accounting processes, Workiva for collaboration and financial reporting, and a cloud-based platform for lease accounting.
First and foremost, the technology has to be user friendly and it has to support our Center of Excellence model. We’re often evaluating technology that will be used by people in other departments, and it must be easy to onboard new users. A good example of this is our cloud-based financial reporting platform, which is used by several Hershey teams. The interface has a familiar look and it doesn’t require a steep learning curve for the first-time user.
Second, technology tools have to solve the problem. To implement the new lease accounting standard we required a tool that could provide the actual ASC 842 disclosures. The software had to do the accounting. We are the Center of Excellence for lease accounting at Hershey, and the system is our source of truth. The implementation of the accounting standard was difficult, and it took up a lot of the team’s time. Today, it’s up and running, and it meets our criteria for solving the problem.
Q: External audit, friend or foe?
As a former auditor, definitely a friend. Your external audit team is there to help you if you work with them.
There is never a dull moment at Hershey. The company is active in M&A and we always have a transaction to work on or a new accounting rule to implement. I am the main point of contact for our external auditors, Ernst & Young. We give our audit team a heads-up about what we’re working on. They’re already in the loop and know what to expect by the time we’re ready to share our preliminary conclusions and action plan.
Q: Tips for career success?
Stay ahead of accounting and regulatory developments and accounting related guidance. Do your research early and develop a point of view for decision-making support.
Do the homework internally to understand how a new development relates to your company, your business, and your disclosures. Consult with your peers in other companies to learn how they are thinking about and working through new accounting and regulatory changes. Take the initiative to write up your conclusion and point of view, and get it in front of the right people for their input, including your auditors and legal counsel.
Q: How has your team adapted to the pandemic and remote work?
Our team is one of the leaders at Hershey in successfully working remotely. I was never a fan of working from home, but I’m starting to embrace it because of our experience during the last year.
First, our technology tools made it possible to work from home. Everything we do is in electronic form. We are big users of the support binders in our cloud-based platform. We don’t even have a hard copy of our quarterly and annual reporting binders. Everything we do from journal entries to approvals is somehow facilitated through an electronic means. It could be through Workiva, Blackline, or even a standard PDF with a time stamp.
Second, we had to face the personal challenges of working from home. We had to recognize the need for flexibility. For people who manage their days to the minute, this was a change. I have small kids and my team has small kids. We adapted to the need to attend to family and children during regular business hours. The team holds personal time on their calendars and we all respect that hold.