Simplify
November 28, 2011
Let’s face it. Compliance activities can burden the Close, especially when the clock is ticking away. Approving journal entries, routing sign-offs and collecting documentation all add bulk to the financial reporting process and can slow us down. While we certainly don’t want to abandon internal controls all together, a critical evaluation of existing controls using the following strategies can help streamline your control set so that fewer resources are expended on the compliance effort during the Close.
- Reduce the total amount of work. Generally, more control points = more work. So in order to reduce the amount of work, consider reducing the number of controls. The key to doing so without compromising governance is to favor process level controls and discard transaction level controls. For example: Approving individual journal entries is a transaction level control. A possible process control replacement would be to approve a master journal entry listing. Often, one process control can replace multiple transaction level controls.
- Reduce the effort to execute each control. Steer clear of manual controls and opt for automation as much as possible, so that the work is not driven solely by brute force. That means redesigning controls to leverage new application features, or exploring a combination of system controls to replace a manual activity. As an added bonus, the more automated the control activity, the more data will be captured by the system. And that translates to readily available information for the auditors and less time wasted on data gathering and photocopying.
Enterprise technology and risk mitigation techniques are evolving faster than ever today, creating terrific opportunities for us to refine and fine tune critical business processes.
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