Sox self assessment questionnaire

When Sarbanes-Oxley compliance arrived in the s, many companies were forced for the first time to assess financial reporting risks and develop stronger internal controls to manage them. The short answer is no; SOX compliance only addresses financial reporting risks.

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Enterprise risk management is another level of complexity. The time and money spent on analysis of business processes, streamlining controls, assessing risk, managing audits—what foundation does it lay to help corporations keep a stronger grip on other risks and compliance obligations, beyond SOX? First, remember that the Sarbanes-Oxley Act compelled the audit committee to take more responsibility for risk management.

Sure, in the first few years of SOX compliance, those audit committees dwelled on the details of financial reporting risk and what should be in scope for a SOX audit. For many companies, those growing pains have passed. The key step for any SOX risk assessment is to understand the business process in question: to map it out, using flowcharts or narratives that break down a process into its component parts, and identify all the risks along the way.

Risks for what? In a SOX risk assessment, risk for material misstatement of financial results. For enterprise risk management, the risks can be much more diverse. But the steps are the same, and even the tools can be the same. Take the rise of cloud-based data storage providers as one example. Most business executives in the operating units do grasp that service providers can pose serious risks. They use service providers anyway. The question is how they find and use the providers, and what that means for risk.

Or consider anti-bribery risks from the Foreign Corrupt Practices Act. Finding the process owner, understanding the process, flagging risks to each step of the process: those are time-honored ways of unpacking a risk into its component parts. The company might even structure its operations to avoid using agents entirely in high-risk countries.

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A sophisticated risk assessment, however, must consider what other controls can backstop that risk, should the entity-level exhortations against bribery fail.

At the transactional level, such a control might be policy that all payments to third parties in emerging markets must be approved by a business unit president; or all payments to third parties in high-risk countries are held until the party certifies anti-bribery training. Another example could come from supply chain management. Transaction-level controls could include regular audits of critical suppliers, to ensure that none might cause business interruption if they turn out to use slave labor and are dropped from the supply chain suddenly.

Regardless of the specific enterprise risk, the steps to assess it are the same that exist for SOX: assess entity-level controls; see if their design fits the risk in question; consider what other controls at the transactional level can achieve the same objective, if the entity-level control is insufficient.

After assessing risks and identifying the entity-levels and transactional controls to address them, the other critical task for SOX compliance is to audit their effectiveness. That means determining what tests or audits to perform, when to perform them, and what evidence to collect and document.

For audit and internal control executives, this is a process challenge: how do I audit all this, to gain the assurance the organization needs about the risk? Which locations require independent testing, and which can make do with self-assessments and reporting? How do I take the results and report them to the proper business executives in the proper ways? The evidence required for each of those questions arises from the risks defined in earlier phases.

Internal Control Self-Assessment Questionnaire

For example, which locations require independent testing? Where can we rely on self-assessments? In places with senior executives who receive extensive training, who oversee processes with low regulatory enforcement concerns.To achieve this, organisations need to implement Control Self Assessment CSA which is defined as an effective approach to identifying and managing areas of risk exposure, as well as highlighting potential opportunities.

CSA provides a framework for helping organisations to manage their risks to achieve their business objectives. In simple terms, CSA involves a structured approach to documenting business objectives, risks and controls and having operational management and staff assess the adequacy of controls.

sox self assessment questionnaire

Implementing CSA successfully, requires people with the necessary experience in these type of projects to ensure the major benefits of CSA are achieved. All rights reserved.

Please see www. Organisations should continuously assess their risks and the effectiveness of the controls mitigating these risks. Control Self Assessment To achieve this, organisations need to implement Control Self Assessment CSA which is defined as an effective approach to identifying and managing areas of risk exposure, as well as highlighting potential opportunities.

We can help you to: Obtain a clear and shared understanding of major activities and objectives of business units and processes. Foster an improved awareness of risk and controls among management and staff. Provide a flexible but structured approach to improving the controls framework through the organisation Enhance responsibility and accountability for risks and controls among management and staff.

Highlight best practices and opportunities to improve business performance. Standardise and benchmark processes, where the same functions are performed in multiple locations. Help directors to meet their corporate governance responsibilities.

sox self assessment questionnaire

Reduce the time and effort it takes for internal auditors to gather information on business units, and providing quicker focus on areas requiring attention. Critical success factors Involving the right people in the organisation to support, foster and own the CSA process.

Allocating sufficient time and resources to properly prepare for and carry out workshops and subsequent follow-up. Having adequately trained and experienced facilitators to conduct CSA workshops. Proper design of a structured but flexible CSA methodology that avoids the creation of overly simple or confusing checklists.

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Our services are: Design CSA Methodology There are many different CSA techniques that range from simple questionnaires, one-on-one interviews, facilitated workshops and automated solutions. We can assist in selecting the best approach to follow. Provide CSA Training Our training will give your management and staff the necessary understanding of CSA to support its implementation and acceptance in the organisation.

Project Management of the Implementation We can provide experienced professionals to manage the implementation of CSA. Conduct CSA Workshops We can help develop risk and control questionnaires and facilitate workshops to support the implementation of CSA and provide advice on risks and effective controls.

Quality Assurance We can review and access your current processes against best practices, prepare gap analyse and identify improvement opportunity.

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Assist Internal Audit We can assist your Internal Audit to adjust their methodology, policies and procedures to more effectively audit the CSA process. Follow us. Office Worldwide.It is true that RCSA's have a survey element, but a true self-assessment can be so much more.

Internal Control: Risk Assessment - COSO Framework - Auditing and Attestation - CPA Exam

Best practice organizations are making use of more than surveys. There are some variations regarding RCSA techniques, but in general there are three common methods for performing the evaluations:.

Surveys and Management Analysis are complementary methods that are widely used in internal control scenarios, especially in SOX management. While we have shifted away from this practice, there is a huge potential benefit to bringing the workshop back. We'll start with establishing the basics. A Facilitated Workshop is a dynamic, participative event, led by a trained facilitator, generally an internal auditor who holds the Certified in Control Self-Assessment CCSA designation, in which the organization's management is actively engaged in a discussion about risks and controls.

sox self assessment questionnaire

The objective of the Facilitated Workshop is to engage management in a discussion that leads to an evaluation of the effectiveness of the controls the organization has in place, and ultimately to gain consensus on whether or not all related business objectives will be met with the controls that were examined.

There are four formats and underlying workflows for the workshop discussions:. The overall goal of each of the formats may be to evaluate control effectiveness, but the starting point for the discussion is different and will often be determined by the organization's culture and how well management understands the control environment. For relatively new organizations, or for those groups in which management has not been educated in risk and control concepts, it may be best to start with process- or objective-based workshops.

These formats will better enable a more educational slant to the workshop. For more experienced management teams, the risk- or control-based workshops may work just as well. In the end, going through the processes, objectives, risks, and controls with management in an engaging workshop setting can have some surprising secondary benefits:.

Inmost organizations went through painstaking exercises to map their internal controls to the principles outlined in the updated framework. The information is just as relevant to the process and control owners. With the information still fresh in our minds, we should take the opportunity to bring the process and control owners into the conversation, and a great way to accomplish this task is through the Facilitated Workshop. Step 1 - Choose the right attendees Probably the most important part of organizing the facilitated workshop is choosing the right people to include in the meeting.

SOX 404 top–down risk assessment

You need to choose attendees who can contribute to the conversation, and you also need to invite people who are willing to speak in front of each other. Bringing in accounting managers from the expense group might be the right idea, but if you also include the controller, the rest of the group might be too nervous to participate. Step 2 - Plan the Agenda If you are facilitating the workshop, this is your meeting. You set the agenda, and it's your job to keep everyone on track.

As with most exercises, planning is crucial for success. Based on the plan, there might be some work to do up front.

For example, if you want to review survey results during the session, you'll need to plan time to send the survey and compile results. Step 3 - Execute the Workshop During the workshop, there are a number of methods for getting the group to engage in the conversation. You might try one the following:. Remember as you go through this process, your job is to facilitate.

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You are not there to feed the participants answers, so don't take over. Another big aspect of the workshop is documentation.The term is used by the U. It is also used by the external auditor to issue a formal opinion on the company's internal controls.

However, as a result of the passage of Auditing Standard No. The language used by the SEC chairman in announcing the new guidance was very direct: "Congress never intended that the process should become inflexible, burdensome, and wasteful. The objective of Section is to provide meaningful disclosure to investors about the effectiveness of a company's internal controls systems, without creating unnecessary compliance burdens or wasting shareholder resources.

TDRA is a hierarchical framework that involves applying specific risk factors to determine the scope and evidence required in the assessment of internal control. At each step, qualitative or quantitative risk factors are used to focus the scope of the SOX assessment effort and determine the evidence required. Key steps include:. Management is required to document how it has interpreted and applied its TDRA to arrive at the scope of controls tested.

In addition, the sufficiency of evidence required i. The guidance is principles-based, providing significant flexibility in the TDRA approach. There are two major steps: 1 Determining the scope of controls to include in testing; and 2 Determining the nature, timing and extent of testing procedures to perform. The key SEC principle related to establishing the scope of controls for testing may be stated as follows: "Focus on controls that adequately address the risk of material misstatement.

Significant accounts and disclosures are in-scope for assessment, so management typically includes this information in its documentation and generally performs this analysis for review by the auditor.

This documentation may be referred to in practice as the "significant account analysis. New under the SEC guidance is the concept of also rating each significant account for "misstatement risk" low, medium, or highbased on similar factors used to determine significance.

The misstatement risk ranking is a key factor used to determine the nature, timing, and extent of evidence to be obtained. Both significance and misstatement risk are inherent risk concepts, meaning that conclusions regarding which accounts are in-scope are determined before considering the effectiveness of controls.

Objectives help set the context and boundaries in which risk assessment occurs. Objectives, risks, and controls may be analyzed at each of these levels. The concept of a top-down risk assessment means considering the higher-levels of the framework first, to filter from consideration as much of the lower-level assessment activity as possible.

There are many approaches to top-down risk assessment. Management may explicitly document control objectives, or use texts and other references to ensure their risk statement and control statement documentation is complete. There are two primary levels at which objectives and also controls are defined: entity-level and assertion level.

An example of an entity-level control objective is: "Employees are aware of the Company's Code of Conduct. Evaluation suggestions are included at the end of key COSO chapters and in the "Evaluation Tools" volume; these can be modified into objective statements. An example of an assertion-level control objective is "Revenue is recognized only upon the delivery of products and services. SAS includes the latest guidance on financial statement assertions. Control objectives may be organized within processes, to help organize the documentation, ownership and TDRA approach.

This is how most auditing textbooks organize control objectives. Processes can also be risk-ranked. COSO issued revised guidance in effective for companies with year-end dates after December 15, This essentially requires control statements to be referenced to 17 "principles" beneath the five COSO "components. Most of the principles and points of focus relate to entity-level controls.Section is the most complicated, most contested, and most expensive to implement of all the Sarbanes Oxley Act sections for compliance.

All annual financial reports must include an Internal Control Report stating that management is responsible for an "adequate" internal control structure, and an assessment by management of the effectiveness of the control structure. Any shortcomings in these controls must also be reported.

Thinking Like an Auditor

In addition, registered external auditors must attest to the accuracy of the company management assertion that internal accounting controls are in place, operational and effective. With respect to the internal control assessment required by subsection aeach registered public accounting firm that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer.

An attestation made under this subsection shall be made in accordance with standards for attestation engagements issued or adopted by the Board. Any such attestation shall not be the subject of a separate engagement. Copyright c Sarbanes-Oxley All Rights Reserved.As businesses grapple with how best to comply with new regulations such as Section of Sarbanes-Oxley SOAthe use of control self-assessment techniques might deserve a fresh look at many companies.

CSA is a flexible discipline of customizable techniques for compiling key organizational information for decision-making. This attribute makes control self assessment techniques widely applicable to and valuable for enterprise initiatives like Section compliance, enterprise-wide risk management programs, and internal control initiatives.

Key role for Sarbanes compliance A self-assessment process can be employed by organizations at various stages of an SOA project ranging from initial scope definition to development of the testing strategy. Additionally, self-assessment may facilitate understanding of:.

Answers to these complex questions can be developed through a collaborative self-assessment process that will facilitate the collection of data from the appropriate personnel. An organized program accompanied by a tool for data storage and analysis will greatly enhance these efforts. One advantage of using CSA is that it may help save time. Another benefit of control self-assessment is that it gets both process owners and management involved in reviewing controls.

Profiles of risk Internal auditors perpetually evaluate risk throughout an organization to determine the priorities that will be addressed within the annual risk-based audit plan. An ideal process includes significant participation by executives and line managers in a collaborative effort.

Using control self-assessment can help an internal audit department craft an effective auditing plan that directs department efforts to the areas of highest risk within a company.

In that way, control self-assessment can help an audit department more effectively allocate budget dollars at a time of increasing demand for those dollars to comply with new regulations. Many organizations are looking to build in enterprise wide risk management and continuous risk assessment capability. Collecting information from personnel knowledgeable about changes in organizational risk attributes is a significant challenge to an effective ERM program.

Executive management is often not afforded the luxury of both timely and accurate information to execute decisions. A CSA tool can help bridge this gap. Incorporating a web-based technology into your CSA program offers the following benefits:.

The most effective technologies will be flexible and provide real-time transparency into your assessments. While serving as corporate auditor for Canada Post the Canadian government-owned mail delivery companyYoung instituted an annual control self-assessment program. She identified four business processes and 11 enabling processes supporting those business functions.

Key personnel would be invited to a process workshop. Each would receive a pre-meeting packet of information, asking them to evaluate risks and controls and to vote on control effectiveness. Some of her annual workshops included more than 50 people for a given process with about people across the company being involved in one of the 15 workshops held.Many important key financial control procedures reside in the decentralized units overseen by departmental fiscal administrators.

As such, a series of comprehensive questionnaires have been developed to assess the level of compliance with key financial controls and are facilitated through the Sarbanes-Oxley Control Self-Assessment SOX CSA. The SOX CSA tool is a web-based application and was developed for fiscal administrators to utilize in order to assess compliance in areas overseen by them.

All Responsibility Centers are required to complete the questionnaires and update them at least on an annual basis. If you are a fiscal administrator and do not currently complete a CSA but believe that you should, talk to your Responsibility Centers business manager or contact the Sarbanes-Oxley Project Management Department at Internal Audit Department.

Control Self-Assessment Many important key financial control procedures reside in the decentralized units overseen by departmental fiscal administrators.


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