5 Steps to a More Efficient Internal Control Environment

Is your team overwhelmed with activities that feel unnecessary?

How confident are you that the energy spent on testing is focused on the necessary controls?

Leverage policyIQ to systematically focus on the critical controls for management and testing. More efficiently analyze which Financial Statement Assertions, relative to each of your 10K line items, are adequately controlled, which are left vulnerable and which of your relevant assertions is over-controlled! See, plainly, the gaps in your coverage and leverage the evidence to justify the reduction of waste, and plan to concentrate effort on work that matters.

This process really starts with your risk assessment. If you have not leveraged policyIQ to bring automation and reliability to your risk assessment process and want to walk through the policyIQ solution (including the just-released feature that makes cumulative risk calculations possible), reach out to schedule a free working meeting with us! After completing your risk assessment, identifying significant accounts and relevant assertions, and determining which of your processes and objectives are in scope (all steps that can be managed in policyIQ), you can begin the process of rationalizing your controls.

Next, leverage policyIQ to move through these five Control Rationalization steps:

Each step is made more efficient with policyIQ. We can support you to customize templates for the attributes that are critical and unique to your organization. The import, linking, calculations, workflow, and reporting features will allow you to more quickly examine the effectiveness and priority of your procedures. Having confidence in your Control Rationalization process and your internal control environment then allows you to come full circle to look at the bank of risks that you previously identified. You might conclude that some process risks that have consumed time and attention for years are actually not in scope. This Control Rationalization process will help you to be more effective and more efficient through each testing cycle.

Would you like to see sample templates and schedule a working meeting to get the ball rolling? Contact us and reap the benefits by your next testing cycle!

Stop Costly Mining of Information for Each Audit

Many organizations have seen a shift in their SOX environment in recent years. SOX has become commoditized and leadership is concerned about buckling down on the level of work and on the cost of SOX. While many companies have reviewed, rationalized and streamlined their controls down to a more manageable level, focusing on testing only the key controls amounting to less than 150 in most cases, we still see that many have not entirely streamlined their management of the full cycle of analysis and documentation. Have you?

  • FinancialStatementsWho performs your Financial Statement Risk Assessment? Where is the documentation of that process and the conclusions regarding significant accounts and relevant assertions kept?
  • Have you plainly identified and documented your Financial Statement Risks and are you able to demonstrate which Controls are critical to their mitigation?
  • Of course, tests are being performed; but how are you tracking the evidence associated with those tests and does it seem that the process of defining and assigning audits is as efficient as it could be?
  • Do you have historical record of your audit findings, issues and methods of remediation? Can you easily review and determine the most cost effective approaches to remediation?
  • Can you pull up evidence of COSO coverage as simply as you can share your Risk-Control matrix?
  • Apart from the staples of SOX documentation, where do you document things such as considerations and assumptions for key decisions, exceptions or overrides?

Probably the most simple question yielding the most telling answer regarding whether your SOX program is as effective and efficient as it can be is this: do you perform and maintain all of this documentation in one system or is it someone’s responsibility to mine information and evidence for each external audit? piggybankIf each of these processes is happening in different mediums, stored in different repositories and managed with a wide range of workflows and procedures that are in place simply because “it’s always been that way”, then you have a significant opportunity to save time and money while more effectively managing your SOX program and, therefore, improving the bottom line of your company.

Of course, this message is for those organizations that have yet to bring automation and the power of a database to their SOX processes and documentation. Still, this message should not be lost on the many policyIQ clients who already experience how easily the collaboration of work, hand-offs, review and approval can be managed in policyIQ. We work with many companies who still have portions of their SOX cycle in various systems. Aside from the plain-to-see expense of paying for many different systems, there is cost associated with ongoing maintenance, training, and the time required to bring all of the information together and to relate the key components that paint the picture of an effective internal control environment.

Reach out to us and we’ll provide you with a free demonstration and configuration guidance on streamlining the various segments of your SOX program into one efficient and manageable cycle. We can schedule your configuration session within the week and have you up and running in the next 4-6 weeks! Talk to you soon!

Let us help you implement the COSO 2013 structure in policyIQ in under an hour!

If you have not already implemented policyIQ to more efficiently work through your transition to COSO’s 2013 Internal Control – Integrated Framework, we can help you to get started!  Companies with a calendar year-end are rushing to map their controls and address gaps with appropriate controls so that they are ready for testing in Q4.

Have policyIQ COSO-Ready in Under an Hour

The adjustments to your policyIQ site and import of the COSO Principles and Points of Focus can all be completed in under an hour and in these four steps:

4 Steps to policyIQ COSO Readiness_blog
NOTE: We have pre-populated spreadsheets that we are happy to share with you. Or, if you prefer, our policyIQ Support team can complete the entire COSO setup and import for you. Contact us for more information: Support@policyIQ.com.

Mapping, Analysis, Rationalization and Evidence

Now you are ready to begin the COSO mapping process. You may run a report of your Controls and link each one to the appropriate Principle or Point of Focus. You may already be aware that companies following the COSO Framework must demonstrate that all 17 COSO Principles are “Present” and “Functioning”. The Points of Focus, while not required, are uploaded and included in the mapping process by many companies, as they provide added assurance and justification for your control mapping decisions.

Once all of your Controls (typically Entity Level Controls) are properly mapped, you can use policyIQ’s Detail Link Report to see a view of all Principles, linked Points of Focus and Linked Controls. This report provides an excellent foundation for Gap Analysis and for Control Rationalization. It also can serve as evidence of coverage for your external auditors.

Let us connect you with the experts!

If you find that your team is struggling to find time, resources or the necessary subject matter expertise for your COSO Transition Project, contact us and we’ll align you with a subject matter expert who can help you in the areas where you need it most (from the initial setup, mapping, gap analysis, establishment of new controls—or documentation of controls that have, to this point, been less formal—to control rationalization and testing).

Contact us today—for your free copies of the import spreadsheets, to request the import to be completed by our support team or to learn more about working with one of our subject matter experts!

 

Lessons Learned from Early Adopters of the 2013 COSO Framework

RGP brought us a second COSO webinar hosted by these Audit, Risk, Finance and Accounting experts:

COSO Follow-up Presenters

Watson kicked off RGP’s follow-up webcast with a recap of the highlights of the first session hosted a couple of months ago that addressed effective implementation of the updated COSO Framework. She noted that the framework is not significantly different from the first version of COSO’s Internal Control Integrated Framework published in 1992. The most notable change is that the 17 Principles that were introduced in language that was embedded in the earlier version have now been called out and defined more formally in this latest version.

Evidenced by a session polling question, a significant number of companies have now moved into the planning stage and are beginning the process of mapping their controls to Points of Focus or Principles. Remember that companies using the COSO framework must demonstrate that all 17 Principles are present and functioning, but the Points of Focus are not required. While COSO says that the Points of Focus are intended to be considerations, Les Sussman noted that we are finding that many companies are mapping to the Points of Focus and using them as a checklist of sorts to help with the mapping process.

In the project timeline review, Sussman noted the importance and value of checking in with your external auditors early and often. He urged attendees to get started as soon as possible as those with a December Fiscal Year End will be expected to demonstrate adequate coverage of COSO’s 17 Principles by the end of this year.

COSO Project Timeline

John Digenan further emphasized Sussman’s point that the mapping process was not particularly time consuming. The mapping portion of the project is pretty straightforward and can go pretty quickly—as it did for Microsoft. The process of updating and validating controls is really what takes the lion’s share of time in this transition process.

The team examined and reviewed three case studies, involving Microsoft, a large telecommunications company ($128B) and a smaller mining company ($1.5B). In each of these cases, the company performed an initial bottom up approach; mapping entity level controls to related COSO Principles. All three considered the COSO Points of Focus to help them with the gap analysis and remediation process (although some did not formally document gaps and remediations in this early stage of the process). Each organization had similar findings to John’s regarding time spent on mapping. This part of the process went pretty quickly (in a week or two). All found the early involvement of external auditors to be helpful. Another common finding was that so-called “missing” controls were being performed, but were not formally documented and tested. Even in the largest organizations, only about a dozen controls needed to be documented.

The team also presented some of the challenging issues (and the associated “good news”) for this 2013 COSO Framework implementation project:

Challenging Issues

policyIQ_COSO_4Steps_1HourLes Sussman took a moment to remind attendees that RGP owns a GRC application (a SOX tool, among other uses) and highlighted the 4 simple steps that an existing policyIQ client can work through in about an hour to have all COSO Principles and Points of Focus properly documented, linked and filed in policyIQ to prepare for the mapping process. For those companies who have properly licensed (purchased) the 2013 COSO Internal Control – Integrated Framework, RGP’s policyIQ team can help clients with the importing of COSO Principles and Points of Focus by providing import templates that are pre-populated and ready to go. Configuration guidance for brand new policyIQ clients is also included in the affordable policyIQ licensing fees (generally about 1/10th the cost of comparable competitors). Contact us (support@policyIQ.com) for more information on using policyIQ for management of your SOX and COSO processes and related documentation.

Shauna Watson, Les Sussman and John Digenan wrapped up the session with a question and answer period. Among the flash items discussed:

  • Assuming you used a top-down, risk-based approach before, the COSO framework does not change your approach. In fact, apply that mentality to other areas (non-financial areas) following the AS5, top-down, risk-based approach.
  • The Fraud Risk Assessment is certainly part of the broad Risk Assessment. It can be performed and documented as an integrated part of the formal Risk Assessment. Note that, while it is not required, a separate Fraud Risk Assessment can be very helpful for addressing your organization’s anti-fraud considerations and your coverage of COSO’s Principle #8.
  • Some companies have observed a differences in terminology related to the significance of deficiencies identified (material weakness vs major deficiency). Sussman noted that the framework is clearly guides companies to default to any regulatory regime used to evaluate deficiencies. With regard to SOX, we will continue to use SOX language.
  • Digenan also clarified that the new controls added at Microsoft were entity level controls and noted that the initial mapping process involved only entity level controls, not transaction level controls.

You may follow this link to review a recording of the webinar which goes into much more detail on the case studies and helpful resources. For more information regarding your COSO implementation project, reach out to us and we will put you in touch with a expert in your area. You may also contact us for help with your policyIQ implementation. We can show you how to make quick work of your gap analysis and control rationalization tasks. Let’s get started today—we’ll have you up and running in no time!