Financial Control & Compliance is a fundamental part of a company’s Enterprise Risk Management (ERM) framework which can involve potentially several of these industry specific regulations and reporting procedures.
Aside from regulatory pressures (SOX section 404, COBIT, PCI, ISO 17799/27002), a company’s financial risk appetite will largely determine the level of financial control measures. There are several frameworks and guidelines which provide a methodical approach to developing financial controls. COSO is the most globally recognized framework and several countries use this as guidance to their legislations regarding internal control over financial reporting.
The goal with Financial Control & Compliance:
- Trust and ensure integrity in the numbers!
- Comply with regulations
- Identify risk and establish procedures to eliminate them
There are several operational challenges in establishing an effective internal control framework and ensuring the defined routines and control activities are a part of day to day work. The most common challenges we see are:
- Documentation of framework; this is often inaccessible, multi-versioned and incomplete
- Performance of control activity; schedule is unautomated, results are deficient in evidence
- Visibility into control activity completeness, overall compliance to regulation and areas of unmitigated risk are not real-time or centralized
Process Management and transparency
To achieve good internal control, there is a need for process management and a transparency in the processes by informing the organization about risks and how the risk is mitigated. Key elements of a successful Financial Control & Compliance framework:
Inform the organization about risk and how it is mitigated
Dashboard for status of the risk and control framework
Establish Reconciliation Management as a part of the process
How Adra supports Financial Control & Compliance:
Document, schedule and obtain real-time status of internal controls.
Task manager provides dashboards which drill-down to detailed documentation and audit trail of completed control activities (performance, evaluation, testing). Read more.
Rate Balance Sheet accounts based on risk and materiality, schedule (monthly/quarterly etc.) and approve (one level or more) accordingly.
Document the control procedures and regulatory requirements which mitigate the identified risk and ensure these are performed within the reconciliation.
Gain transparency of the processes through centralization of information and communication. Documentation of the balance accounts according to regulation. Read more.
Mitigate risk identified on balance accounts by doing transaction reconciliation (ex. Bank reconciliation, sub-ledger reconciliation, GL reconciliation….)
Automate business controls on transaction reconciliation ensuring staff focus on the riskier unmatched exceptions. Read more.