It isn’t just us at Trintech who have been stressing the importance of corporate governance across the office of finance. This November, CFO.com has also expressed their views on the topic of risk management and governance in their Metric of the Month: Internal Audit Costs.
This article, which can be seen in full by following the link at the end of this blog, reviews APQC’s data, highlighting the continuous growth around tightening SEC requirements. Due to these tighter requirements, companies are looking to realign their priorities and focus on funding an internal audit tool to further enhance their corporate governance and prevent risk across their finances.
As stated in the article, one of the main reasons why companies hesitate to fund an internal audit function is that they see no adequate value in doing so, as they already feel they spend too much money on external audits. However, Mary Driscoll from APQC makes a valid argument justifying the cost:
“Readers will surely argue that while cost-efficiency is important in any financial process, it is not the end-all and be-all when it comes to good governance. What’s the point of having a dirt-cheap internal controls function if it lacks the resources to do a decent job?”
We could not agree more with this statement, as we know the importance of implementing a governance tool that is not only efficient, but also effective. As we stated in a previous blog, “Do Companies Have A Looser Grip On Controls Than They Think?,” studies indicate that 36% of company audits have internal-control deficiencies, and this trend is on the rise. However, it is possible to reduce the time and effort of internal audit and lower the cost of external audit testing fees through the implementation of an oversight tool that manages compliance initiatives.
Richard Chambers, President and CEO of the IIA expounds a warning for those who don’t look to manage their control environment effectively by stating “Organizations operate in a global marketplace that is dynamic, fast moving, technology-driven, and as competitive as ever. In this atmosphere, the odds are stacked against those with a less-than-ideal risk management and control environment.”
To see more, click on the banner below to download our insights piece which examines how key financial controls are managed within the overall compliance framework.
To read the CFO article in full, please click here.