Implementing best-in-class internal controls
Internal control programs that are heavily dependent on manual processes, lagging legacy software or spreadsheets can hide fraud and control gaps. According to the Association of Certified Fraud Examiners, organisations lose about five per cent of annual revenue to fraud – and internal control weaknesses are responsible for about half of that fraud.
Organisations that lack dedicated internal control solutions are also easy targets for data and network intruders.
Companies typically wait for an audit finding or breach in the lines of defence to justify the investment in retooling internal control processes and infrastructure, but they shouldn’t.
Investing in a best-in-class internal control framework isn’t as expensive, painful or time-consuming as you might think. Here are three reasons why investing in a best-in-class internal control framework is easier than you might think.
1. The C-suite wants a tech-enabled risk management program
You may already have C-Suite buy-in for a purpose-built risk management solution without realising it. The overall governance of risk management is top of mind for C-suites and boards. Given the potential reduction in fraud, upgrading outmoded and inefficient internal controls represent low-hanging fruit for risk management, putting them squarely in the sights of the C-suite and board.
In addition, many companies have adopted board portals that offer interactive dashboards with real-time data, so boards and executives understand the value of consolidated and customised views of the overall health of the organisation’s lines of defence.
Moving beyond spreadsheets and other inefficient tools to a purpose-built and automated solution provides the C-suite confidence that unwanted risks are adequately addressed, laws and regulations are adhered to, financial statements are accurate, and resources are allocated appropriately.
It also allows internal control teams to demonstrate the value of their work and pave the way for future improvements and automation.
2. A seamless user experience can mitigate cultural resistance to adopting a new internal control framework
Managing the cultural aspects of software implementation — including user adoption and sentiment — is challenging for even the largest and most sophisticated companies. Best-in-class internal control solutions offer an intuitive interface that requires little onboarding or training, reducing change-management issues and accelerating time-to-value. They should embed on-demand tutorials that offer training at the user’s own convenience, bringing the internal control team up to speed quickly and painlessly.
Here’s a pro tip to gain the smoothest transitions when upgrading an internal control program: Involve your company’s IT department as early as possible when choosing a tech-enabled internal control solution.
IT’s involvement in implementing an internal control system is paramount as internal control touches many financial systems across an organisation. From a cultural standpoint, their blessing and cooperation can help pave the way to successful implementation of the software.
3. A best-in-class internal control software solution accelerates ROI
Replacing inefficient internal control systems with purpose-built solutions automates control tracking processes and supports continuous monitoring. This facilitates collaboration among team members, improves the allocation of resources, reduces expenses and ensures adequate governance over processes.
If internal controls are to be effective, organisations need to create an appropriate culture and embed a commitment to robust controls throughout the organisation.
Many companies with obsolete internal control programs suffer from a ‘workaround’ culture. Over time, manual processes and outdated technology become a barrier to adopting emerging best practices.
One of the quickest wins offered by a purpose-built internal control solution is the instant elevation of the entire program to best practices standards. Best-in-class software solutions are configured with COSO, COBIT and ISO standards and templates that are in place right out of the box.
For more information check out SAI360’s white paper, 3 Keys to a Best-in-Class Internal Control Program and resource hub.
SAI360 is a leading provider of risk, learning, EHS, and sustainability software. Our cloud-first SAI360 platform contains flexible, scalable, and configurable modules for a better vantage point on risk management. Our unified approach to risk management is what sets us apart, helping organisations across the globe manage risk, create trust, and achieve business resilience for over 25 years.
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