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| David Cuykendall www.accountinglogics.net |
Internal accounting control is largely process control whose structure and principles differ little from the process controls of an oil refinery, a manufacturing plant, or even the food processing activities of a restaurant.
Forms of Organizational Knowledge
Tacit knowledge is knowledge gained subconsciously through hands-on activity. Tacit knowledge depends on individual intuition, creativity, personal insight and instinct. A major problem with tacit knowlege is that it is often both declaratively and procedurally captured on users' desktop computers and is not shared or formalized.
GRC Pain Points
Major "pain points" in governance, risk, and compliance are the lack of a compliance framework, poor technology integration, weak internal controls, stove piping (no global remediation), and inability to audit (no audit trails).
GRC Challenges in the Client Space
Major governance, risk, and compliance challenges are no standardized policies and procedures, no real time visibility and communication with data, non-standard information, cost of compliance activities, and no clearly defined roles and responsibilities.
GRC Transaction Real World Examples
Major governance, risk, and compliance transaction controls are tests against material thresholds, detection of anomalies, periodic sampling of transactions, tests to detect re-dating of control documents and duplicated customer and vendor list data, embedded preventative controls, and automated compensating controls (to prevent conflicts of duties).
How GRC Simplifies Internal Controls
Governance, risk, and compliance can be simplified by a single source for multiple GRC activities, controls automation, embedded controls, and seeded content (out of the box policies and templates).
Role Layering
Responsibilities and authorities are established through delegation to the line role in asset-based and delivery entities, and assignment of tasks to support roles in the delivery entities that serve, by design, the asset-based entities. A single point of accountability applies. The line role has primacy, and acts in accordance with the management system. The asset-based entities are responsible for enterprise assets and the financial results they deliver.
Schematic for Standard Operating Procedures (SOPs)
A high quality system for turning standard operating procedures (SOPs) into written working procedures using living documents is crucial for enterprise efficiency, turning business processes into self-sustaining mechanisms. The true test of a well-drafted SOP is if someone unfamiliar and untrained can use the SOP to perform the task it describes. Also, SOPs in a quality SOP system can be revised and approved within minutes.
Schematic of Standard Packaged Financial Systems and Reports
Standard packaged financial systems limit decision making support to transactions-based data. Standard packaged financial systems are useful for transaction processing, fiduciary reporting, GAAP financials, routine operational monitoring, and regulatory and tax compliance only.
Standard Packaged Financial Management Systems
Standard packaged financial management systems are entirely transactions driven, making them ill-suited on their own, to serve the aims of comprehensive integrated entrepreneurial enterprise piloting.
Systems Drive Behavior
A system's behavior is derived from its structure — and a system's function (i.e., its utility) is derived BOTH from its structure AND its behavior.
The Four Competence Partitions of Financial Management
Each of the four competence partitions of financial management (i.e., primary modes of financial management) run in their own unique, separated environments. These environments are in fact core enterprise assets and need to be treated, managed, and maintained as such.
The Structure of the Financial Management Supporting Environment
The financial management supporting environment includes a collection of function-means combinations supporting an effective, highly organized separation of concerns that synchronized together forge proprietary competitive advantage.
Traditional versus Entreprenuerial Accounting & Reporting
Traditional fiduciary and tax compliance accounting and reporting (i.e., statutory accounting and reporting) is compliance oriented whereas the goal of entrepreneurial accounting and reporting includes the broader aims of clarity, focus, and unity of effort in the enterprise.
