Public companies subject to Sarbanes Oxley (SOX) requirements with a calendar year-end are wrapping up their projects to transition to the 2013 COSO Framework. Among the seventeen Principles formalized in the 2013 framework is Principle 8, which states, “The organization considers the potential for fraud in assessing risks to the achievement of objectives.”
Track Fraud Mitigating Controls
One step that many policyIQ clients are taking to demonstrate evidence that they have adequately addressed this principle is to “flag” their controls that are fraud mitigating. If you do not already have one, we recommend adding a field to your Control template in policyIQ to track whether a Control is fraud mitigating. This allows you to easily report on all Controls where the answer is yes and to relate those Controls to Principle 8 (unless you are linking to Points of Focus, in which case you will link each of the Controls to the most appropriate of the four Points of Focus related to Principle 8).
Address Revenue Recognition Fraud
In addition to feeling greater pressure in the last couple of years from the Public Company Accounting Oversight Board (PCAOB) and the Committee of Sponsoring Organizations of the Treadway Commission (COSO), most companies will also be affected by the new Revenue Recognition Standard. The new standard is the result of a joint effort by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) that aims to improve upon and to address inconsistencies between the previously held International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP). No doubt, some of the most notorious cases of corporate fraud have been directly related to revenue recognition fraud.
Complying with the new standard is a big undertaking for companies. We have written on our blog about the application of policyIQ to better monitor your contracts and agreements and the work that RGP has done to prepare a deep pool of Revenue Recognition subject matter experts around the country to walk alongside accounting professionals and help them to close gaps in their practices. Here, also, is a link to access the recording of RGP’s recent webcast: The New Revenue Recognition Standard Webcast Series (Part 2): How to Begin Implementing the New Standard.
Formally Assess the Risk of Fraud
Additionally, many companies are finally formalizing their fraud programs by instituting a dedicated Fraud Risk Assessment, documenting mitigating controls, identifying gaps, and filling gaps, and so on. Whether using your methodology and questionnaires or RGP’s, we can help you to manage the process more efficiently in policyIQ.
Using policyIQ, it is simple to capture and deploy your fraud questionnaire(s) to the relevant employees, inventory responses and analyze results. Similar to other compliance work in policyIQ, you can link your capabilities or controls to any Fraud Risks that were identified and use policyIQ reporting to easily highlight any gaps in coverage.
Interested in bringing automation to your program or need a subject matter expert to help you develop your Fraud Prevention Program? Reach out to us and we’ll put you in touch with the right person in your area.