KnowledgeLeader Blog

Top 10 Pages: May 2019

Posted by Protiviti KnowledgeLeader on Tue, Jun 04, 2019 @ 04:55 PM

We like to take a look at the most popular tools and publications that we've published so that we can get a sense of what our readers enjoy most. This  last month's Top 10 list has variety--we see some classics, some surprises, and a lot of content that should be useful for completing your audit projects throughout 2019 and beyond. Check out the full list and enjoy!

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1. Internal Audit Performance Measures Key Performance Indicators (KPIs)

An effective business process is built on a set of well-defined and clearly stated business objectives. To build and continually improve an effective business process, a company establishes: key objectives to articulate the performance results the company expects from the business process, outcome measures to determine whether the company has reached the key objectives, and activity measures to monitor the performance of instrumental activities.

This tool outlines key objectives for conducting internal audits, the outcome measures associated with each objective, and the activity measures that drive each outcome measure. A link connects each outcome measure with its corresponding formula and analysis.

 

 

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2. Inventory Policy

This policy outlines guidelines and accounting policies to ensure that inventory is properly controlled and costed, and losses or shortages are prevented. It applies to all inventory items, including raw materials/parts, work in progress, and finished goods and consigned inventory. The procedures focus on inventory valuation, slow moving and excess inventory/reserves, reconciliation of perpetual inventory, physical inventory, consigned inventory, scrap, intercompany transfers, and capitalized cost.

In this sample, inventories are stated at the lower of cost or market. The valuation method for each item of inventory shall remain consistent from one accounting period to the next accounting period.

 

 

 

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3. AR and Cash Application Process Flow

This document can be used as a general guide to understand and review the AR and cash application process. Organizations should continuously update and monitor the processes included in this document to ensure that they accurately reflect business operations.

 

 

 

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4. Accounts Payable RCM

This document outlines risks and controls common to the “process accounts payable” process in a risk control matrix (RCM) format. 

Sample risks include: duplicate invoices are received and processed, leading to duplicate payment; goods are received for unauthorized or invalid purchase orders and are not appropriately recorded in the system; and misappropriations or fraudulent payments may be made.

 

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5. Control Self-Assessment Questionnaire: COSO

Self-assessment is a recognized best practice that has been applied to risks and controls for many years. Systematically applied across the organization at the entity and process levels, self-assessment is a pre-determined approach whereby individuals self-review or self-audit controls and communicate the results to appropriate management.

 

 

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6. Procurement Internal Controls Audit Work Program

This sample audit work program reviews the internal controls in an organization’s procurement process.

Sample questions to consider include: Are purchase orders based on authorized requisitions? Are purchase orders properly coded to identify the cost objective (direct, indirect or inventory)? Are purchase orders serially controlled and accounted for? Is the use of standardized purchase orders required? Are effective numerical document controls or status reports maintained to record the receipt of purchase requisitions? Does the purchasing department maintain specifications for all materials and services used by the contractor? Are requirements combined where appropriate? Are the receiving and inspection functions separate from the purchasing function?

 

 

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7. The Updated COSO Internal Control Framework: Frequently Asked Questions

In May of 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released its long-awaited updated Internal Control – Integrated Framework (New Framework). The New Framework is an important development; it facilitates efforts by organizations to develop cost-effective systems of internal control and supports organizations as they adapt to the increasing complexity of a changing business environment.

Companies should familiarize themselves with the New Framework, determine their transition plan, and communicate to stakeholders the release of the New Framework and its implications to the organization. In this booklet, we address various questions regarding the New Framework from COSO, including the reasons why it was updated, what has changed, and more.

 

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8. Internal Audit Risk Assessment Questionnaire

Internal audit performs a risk assessment to identify and prioritize key risks to best allocate the internal audit resources for the next year. This risk-based approach is focused on surveys/interviews of a cross-section of management personnel to solicit input from the potential customers of an internal audit function. 

The output from the surveys and interviews can be used to develop an audit plan that creates broad coverage through a blend of internal audits, control self-assessment and targeted external audit coverage.

 

 

 

 

 

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9. Enterprise Risk Management Questionnaire

The ultimate goal of enterprise risk management is to evaluate total returns relative to total risks, leading to more informed business decisions. Many ask questions about its value proposition. This questionnaire can be used when analyzing an organization’s enterprise risk management strategy. It focuses on the internal environment, objective setting, risk identification, risk assessment, risk response, control activities, information and communication, role of the board of directors, role of management, common risk failures, and trading activity.

 

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10. AR Aging and Collections Process Flow

Accounts receivable (AR) aging report lists unpaid customer invoices; a primary tool used by collections staff to determine which invoices are overdue for payment. The AR collection process is used to evaluate how long customers take to pay their invoices. 

This document can be used as a general guide to understand and review the AR aging and collection process. Organizations should continuously update and monitor the processes included in this document to ensure that they accurately reflect business operations.

Topics: KnowledgeLeader tools, KL Top Ten

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