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by The Value Core

Safeguarding Compliance and Profitability: FP&A Services in UAE for a National Food Company

  • Service Line
  • FP&A
  • July 2020
  • Industry
  • Food Industry
FP&A Services in UAE

TL;DR

A UAE-based national food company narrowly avoided a compliance disaster when a production manager altered the formulation of an animal feed product to boost profits. Our FP&A services in UAE identified this issue during a routine variance analysis. The unapproved change violated government regulations and risked fines worth millions of dirhams. After an urgent intervention, the company reverted to compliance, safeguarding its reputation and ensuring long-term sustainability.

Overview

We provided FP&A services in UAE to a leading food company, focusing on variance analysis and financial reporting. During our engagement, we uncovered a critical compliance issue that could have resulted in severe financial penalties and reputational harm. Our proactive approach and cross-functional collaboration helped resolve the issue and reinforced the value of robust financial planning and analysis.

The Challenges

Unapproved Ingredient Changes:
A production manager altered the formula of an animal feed product by sourcing low-quality ingredients to reduce costs and inflate profits. This change was presented to leadership as cost-saving reengineering to earn incentives tied to profitability.

    • Compliance Violation:
      The altered formulation violated government regulations, exposing the company to significant fines and legal action. Management was initially unaware of this compliance breach.

    • Missed Warning Signs:
      While the changes appeared profitable on the surface, the lack of thorough oversight could have resulted in substantial financial and reputational damage.

Our Approach

  1. 1. Deep-Dive Variance Analysis

    Our FP&A services in UAE include rigorous variance analysis. Through this, we identified unusual discrepancies in the animal feed product’s cost and margins, prompting a deeper investigation.

    2. Cross-Functional Collaboration

    We collaborated with various departments, including the dietitian, to validate the changes in product formulation. The dietitian flagged the new formulation as a compliance risk, citing potential regulatory penalties.

    3. Prompt Escalation

    Realizing the seriousness of the issue, we convened a meeting with C-level executives, the dietitian, and our FP&A team to present the findings and outline the risks.

    4. Strategic Decision-Making

    After careful consideration, the leadership decided to revert to the approved formulation immediately, ensuring compliance and mitigating further risks.

The Results

Regulatory Compliance Secured:

The company avoided millions of dirhams in fines by reverting to the approved formulation.

      • Improved Governance:

        • This incident highlighted the need for stronger collaboration between financial, operational, and compliance teams. Protocols were introduced to ensure thorough reviews of future product changes.

      • Proactive Risk Management:

        • The timely intervention by our FP&A team in UAE averted a potential crisis, safeguarding the company’s financial health and reputation.

      • Enhanced FP&A Role:

        • The value of FP&A services in UAE was reinforced, as our team went beyond traditional financial oversight to address operational risks effectively.

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