2. OUTCOMES FOR YOUTake Business Process Control Basics and Establish a CFO Perspective
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3. WHAT IS BUSINESS CONTROL?Accounting VerificationsSecurity and LocksInternal and External AuditChecklistsSignaturesAny action taken by management to enhance the likelihood that company objectives and goals will be achieved on a sustained basis
4. ELEMENTS OF BUSINESS CONTROLRisk ManagementCorporate CultureProcesses and
SystemsMonitoring
5. DRIVING FLAWLESS EXECUTIONBusiness control drives achievement of goals!CORPORATE CULTURERISK MANAGEMENTPROCESSES & SYSTEMSMONITORINGManagementACHIEVEMENT OF
COMPANY
GOALS & OBJECTIVESEmployees
6. WHERE DO YOU FOCUS?Tax ComplianceDisaster
RecoveryAccounts PayableAccounts
ReceivableAR CollectionsSales
RecognitionFacilities SecurityContract
ManagementEnvironmental
ComplianceSafety
EngineeringHealth &SafetyFixed AssetsCredit FinancingInventoryPurchasingVariable MarketingFixed MarketingWarrantyCustomsPayroll & TimekeepingSupplier
ManagementTreasuryCash ManagementJournal EntriesReconciliationProduct
DevelopmentInsuranceVehicle RemarketingSystem SecurityDistribution
& Logistics
7. CFO ‘TOP SIX’Governance and Ethics
Cash and Treasury
Asset Integrity
Revenue
Purchasing and Payables
Accounting
8. GOVERNANCE AND ETHICSEstablishing a decision framework for doing the right thingCONTROLSAudit Committee
Clear Organizational Structure
Formal Delegations of Authority
Policy Letters
Involvement of OGC
Procedures for Reporting Unusual Events
1-800-847-7911POTENTIAL RISKSGOVERNANCE
Business Mismanagement
Confusion & Inefficiency
ETHICS
Loss of Reputation
Litigation Issues
Asset Loss
9. CASH AND TREASURYProtection and maximum utilization of cash and investment assetsCONTROLSAppropriate Cash Handling Delegations of Authority
Account Reconciliation
Hedging & Risk Transfer Tools
• • •
Use of Treasury & Risk Management ExpertisePOTENTIAL RISKSPOOR CASH MANAGEMENT
Theft or Loss of Cash
Loss of Interest Income
POOR RISK MANAGEMENT
Currency, Interest Rate, & Commodity Exposure
Liquidity Risk
Property & Casualty Hazards
Default Risk
10. ASSET INTEGRITYProtection and usability of Company physical and information assetsCONTROLSPhysical Security
Tagging & Cycle Counts
Receiving/Shipping Processes
Application Control Review
Disaster Recovery Plan
Passwords
User Access ReviewPOTENTIAL RISKSPHYSICAL ASSETS
Loss, Theft, or Damage
Waste & Underutilization
INFORMATION ASSETS
Loss, Theft, or Damage
System / Business Failure
11. REVENUETimely recognition of sales revenue and collection of receivablesCONTROLSSeparation of Revenue Recognition & Cash Handling
Procedures for Revenue Recognition
Aging Follow-up
Bad Debt Allowance Analysis
Account ReconciliationPOTENTIAL RISKSRevenue Over/Understated
Overdue Receivables
Ineffective Collection Process
Bad Debt Exposure
12. PURCHASING AND PAYABLESPurchasing high quality goods and services and paying the right amount at the right timeCONTROLSUse Purchasing Expertise
Budget Management
Supplier Database / Preferred Supplier Listing
Low Value Purchase Review
Standard Terms & Conditions
Receipt Verification
Pre-Payment Review
Account ReconciliationPOTENTIAL RISKSPURCHASING
Unnecessary Purchase
Price too High
Quality Not to Specification
Contracts that Don’t Support Goals
PAYABLES
Pay Wrong Amount
Pay for Goods not Received
Pay Wrong Time
13. ACCOUNTINGEnsuring that accounting records are accurate and managed properlyCONTROLSAccount Reconciliation
Reconciling Item Follow-up
Journal Entry Review & Approval
Up-to-Date Chart of Accounts
Closing Procedures
Budgeting & AnalysisPOTENTIAL RISKSACCOUNTS MISSTATED
Improper Entry Made
Legal Exposure to Shareholders / Regulatory
DATA NOT USEFUL
Poor Categorization
Non-Timely
DATA NOT USED
14. EXERCISE:SPECIAL METAL STAMPERS, INC.Method: Individual Exercise
Objective: Use the CFO Top Six to sift through information and find critical control concerns
Time: 15 minutesInstructions: You are Robin James, and today you are taking over from John Smith as Controller at Special Metal Stampers, Inc. a wholly owned subsidiary of We Build Cars. As you sit down at your desk, you notice a full in-basket requiring your attention. Review the narrative provided (a summarization of several introductory interviews) and the contents of your in-box. Which three concerns would you tackle first, and why?
15. BUSINESS CONTROL TOOLSInternal Control Coordinators
Modular Control Review Programs
6-Sigma
The GAONow that you know where to focus, what tools can you use to find and address concerns?Corporate Policies and Standards
Application Control Review (ACR)
Training
16. CORPORATE POLICIES AND STANDARDSFinance Manual
(www.dearborn.ford.com/fm/)
Policy Letters
(www.ctis.ford.com/policydirect/)
Global Information Standards
(http://www.dearborn4.ford.com/gim/gis/index.htm)
Corporate Systems Manual
(http://www.dearborn.ford.com/security/policy/csm/)Requirements and Guidelines Established by OperationsOther guidelines are available on the process owners’ sites
17. APPLICATION CONTROL REVIEW (ACR)Review and approval process for system developmentThe ACR process requires the business owner of a new or fundamentally
changed system to certify controls are in place before system launch. The process includes a checklist of controls
and discussions with GAO on
a preventive basis
Essential for guarding
information assetsACR Homepage
(www.dearborn.ford.com/eis/552/)
18. TRAININGAdditional training resources for you and your organizationCorporate Training
Courses with control emphasis including: Global 8D (Root Cause Analysis), and Statistical Process Control
Local training through XXXX (To be filled in prior to course)
Business Process Control Training
A comprehensive set of training courses on specific functional areas from the GAO
For more information visit our web-site reference at: www.finance.ford.com/gao/sites/Training/BPC-training.htm
19. INTERNAL CONTROL COORDINATORSCo-located (within automotive groups) subject matter experts in control with business perspectiveLocal support for everyday operational control questions
Assist Management and Operations Proactively in:
Identifying process improvement opportunities
Developing and implementing solutions
Resource for Modular Control Review Process, a self-assessment of controls (see following slide)http://www.dearborn.ford.com/fm/intcntrl/icntgd89/icgprc89/8960/896020.htmlInternal Control Coordinator Roles & Responsibilities (FM 80-60-20)
20. MODULAR CONTROL REVIEW PROGRAMSHelps you identify areas of concern on a progression basis (based on risk)
Should be used at least annually to ensure that operations are under control Process based control checklists for operational reviewModular Control Review Program (FM 89-60-10)http://www.dearborn.ford.com/fm/intcntrl/icntgd89/icgprc89/8960/896010.htmlhttp://www.finance.ford.com/gao/programs/busprogs.htmModular Control Review Programs
21. 6-SIGMAApplication of 6-Sigma Principles to Business Process ControlsPrinciples of 6-Sigma are based in Control
• • •
Planning, measuring and monitoring are critical components
• • •
Emphasize the 6-Sigma Mindset6-Sigma Web-site
www.6-sigma.ford.com
22. THE GAOAdditional resources dedicated to improving your businessUse reviews as a catalyst to create a control mindset within the operating team
• • •
Jointly identify risks and opportunities to focus efforts on high reward areasThe GAO Website (www.finance.ford.com/gao/)
23. CHECKPOINT: CAN YOU…Move Beyond the Business Process Control Basics to Establish a CFO Perspective
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