PracticeAccounting FirmsInternal controls: look back, get ahead – 10 Tips

Internal controls: look back, get ahead - 10 Tips

Sarbanes-Oxley is now well established. While some companies have adopted IT with little fuss, others have done so begrudginly. Perhaps now is the time to consider compliance plans, determine whether they are efficient and overhaul those that aren't. Our ten tips can help

with KPMG

In association with KPMG

1. LEARN FROM EXPERIENCE

The first year of Sarbanes-Oxley was a trial, so learn from all the confusion it
caused and make the experience less painful next time. Do you really need that
many key controls? Are there efficiencies for future compliance? Explore all the
possibilities.

2. WATCH YOUR FLANKS

For those companies that have managed to avoid the dreaded legislation, watch
out. Elements of Sarbox are starting to creep in elsewhere, so keep an eye on
regulatory changes in those countries in which your company has a foothold. You
could find yourself subject to many of the same demands if you have links to
Japan or France, to name but two countries.

3. CHOOSE SARBOX VOLUNTARILY

Some private companies have started to adopt large chunks of the very
legislation that many have struggled with in the past. There are reasons for
doing so; for example, if you are undertaking a systems refresh and looking for
ways to improve controls.

More crucially, perhaps you should think about being able to comply with
Sarbox if your company is a likely takeover target of a US company. It could
just be a deal-breaker.

4. TALK TO INVESTORS

Investors are looking for more insight into the running of the company than
previously, and the FD is in a position to provide that information.

As a rule of thumb, FDs should spend about 20% of their time talking to
analysts and investors, fielding questions on cost control, potential weaknesses
and growth areas.

5. GET INTHE RIGHT NUMBER TWO

With more and more of the finance chief ’s time being taken up by investors and
working with the board, today’s number two in the finance department will be
doing the role that the FD would have been carrying out 15 years ago. That means
a lot of responsibility, so only high-quality candidates should be sought.

6. CONSIDER OUTSOURCING

If Sarbox compliance is still taking up too much of your company’s time and
resources, despite the potential efficiencies in year two, why not let someone
else look after compliance? There are companies that work to take away as much
of the Sarbox burden as possible through shared service centres. This can reduce
costs dramatically and free up resources.

7. SORT OUT YOUR IT SYSTEMS

Technology was supposed to bring massive benefits in terms of increased
efficiency within the corporate structure, but if an implementation is not
risk-managed properly, such as in many notorious public-sector projects, it can
become an enormously costly albatross around the organisation’s neck.

Control any systems upgrade projects to avoid this potential disaster,
putting in as many checks and balances as you can, without causing delays.

8. KEEP YOUR EYE ON PROJECTS

With an increased focus on governance issues, board directors and FDs have
been getting more involved in various business projects. However, that interest
tends to wane as the project progresses, resulting in insufficient emphasis on
ensuring that the forecast benefits of the project are delivered.

Avoid this situation by following the project’s progress closely.

9. GET ETHICAL

Managing a company’s risk and corporate ethics have been intrinsically linked
since the collapse of Enron and Worldcom. Stakeholders are far more tuned in to
the risks facing businesses, and expect companies to manage these risks in an
ethical way. Ensure your enterprise risk management strategy takes this into
account. It may even create value for the business.

10. BUY INTO PROCUREMENT

FDs have traditionally had little regard for procurement issues, but they can
provide an opportunity to unlock tangible value in an organisation. It is not
unusual to identify opportunities to reduce bought-in costs by up to 40%.Those
who have gone through the Sarbox process have an advantage as section 404
requires complete standardisation and full documentation of procurement, so take
advantage of this.

www.kpmg.co.uk

Related Articles

LLPs in Top 50+50: Will LLPs continue to be the preferred set-up?

Accounting Firms LLPs in Top 50+50: Will LLPs continue to be the preferred set-up?

12h Fergus Payne, Lewis Silkin
BDO’s global revenues pass $8bn

Accounting Firms BDO’s global revenues pass $8bn

7d Alia Shoaib, Reporter
Top 40 International Networks, Associations and Alliances: Finding growth amid uncertainty

Accounting Firms Top 40 International Networks, Associations and Alliances: Finding growth amid uncertainty

1w Philip Smith, Reporter
Top 40 International Networks, Associations and Alliances 2017: Big Four tussle for top spot

Accounting Firms Top 40 International Networks, Associations and Alliances 2017: Big Four tussle for top spot

1w Emma Smith, Managing Editor
BDO reports revenue growth of 5.7%

Accounting Firms BDO reports revenue growth of 5.7%

2w Alia Shoaib, Reporter
Taylorcocks announces merger with Surrey firm

Accounting Firms Taylorcocks announces merger with Surrey firm

2w Emma Smith, Managing Editor
Kingston Smith reports 7% gender pay gap

Accounting Firms Kingston Smith reports 7% gender pay gap

2w Emma Smith, Managing Editor
RSM announces two partner promotions

Accounting Firms RSM announces two partner promotions

3w Emma Smith, Managing Editor