Why Business Assurance
Source: MetaGroup, The need for Continuous Control Monitoring, June 2004
In a recent article, the Meta Group indicated several reasons why they are convinced that business assurance is a necessary but cost effective answer.
- Immediate notification of management of problems in enterprise processes: this will be critical as firms seek to enable compliance dashboards and understand the risk critical to Sarbanes-Oxley 409.
- Prevention of having to report control problems: repositioned auditing solutions will provide an “early warning system”, where control weaknesses can be fixed before they need to be reported externally. The ability to identify anomalies at the transactional level will prove to be critical.
- Improvement in external auditor assurance: The Public Company Accounting Oversight Board requires that auditors make an assessment as to the effectiveness of a firm’s corporate governance process.
- Reduction in the reliance on internal auditing: this can be done by embedding control mechanisms in enterprise business processes that evaluate financial controls. Analytic tests can run automatically on a scheduled basis to generate alerts when controls are breached or are no longer sufficient.
- Fraud reduction and improved risk management: this is accomplished by identifying weaknesses that may lead to error, fraud, abuse and inefficiencies.
- Extensibility to multiple end-to-end business processes: this is controls assurance for multiple business and compliance processes.
- Improvements to efficiency and effectiveness: a properly designed and implemented continuous controls process has the potential to increase profitability by containing costs, minimizing losses, and improving revenue collection.
- Provision of controls in outsourced processes: as firms outsource transactional finance and accounting, business intelligence and the audit ability of outsourced processes move to the forefront. A robust BI platform is required to provide extensive analysis capability. In addition, applications that independently monitor transactions and check for controls compliance across business processes will be critical to monitoring data across applications.
- Independent testing of controls: this should provide the capability of auditing data by a third-party vendor that is independent of the actual business processes and that may provide an “unbiased” opinion.