Enterprise Risk Management Best Practices From Assessment to Ongoing Compliance

by Marchetti, Anne M.

• ISBN13: 9780470917404
• ISBN10: 0470917407
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-10-25
• Publisher: Wiley

Summary

High-level guidance for implementing enterprise risk management in any organization A Practical Guide to Risk Management shows organizations how to implement an effective ERM solution, starting with senior management and risk and compliance professionals working together to categorize and assess risks throughout the enterprise. Detailed guidance is provided on the key risk categories, including financial, operational, reputational, and strategic areas, along with practical tips on how to handle risks that overlap across categories. Provides high-level guidance on how to implement enterprise risk management across any organization Includes discussion of the latest trends and best practices Features the role of IT in ERM and the tools that are available in both assessment and on-going compliance Discusses the key challenges that need to be overcome for a successful ERM initiative Walking readers through the creation of ERM architecture and setting up on-going monitoring and assessement processes, this is an essential book for every CFO, controller and IT manager.

Author Biography

Anne M. Marchetti has twenty-five years of finance and accounting experience in both private industry and public accounting. She is a Sarbanes-Oxley subject matter expert focused on the design, implementation, analysis, and optimization of internal control systems and corporate governance programs. Ms. Marchetti has worked globally with both public and private entities in most industries as well as organizations of all sizes. She regularly interacts with Big Four, middle market, and local external audit firms as a liaison on behalf of these organizations. She is a member of the AICPA faculty and is the author of Beyond Sarbanes-Oxley Compliance: Effective Enterprise Risk Management and Sarbanes-Oxley Ongoing Compliance Guide, both published by Wiley.

Table of Contents

Preface	p. xi
Overview of Enterprise Risk Management	p. 1
ERM Introduction	p. 1
Guidance: History and Relationship	p. 3
Organization View	p. 5
ERM Today	p. 7
Increased Pressure to Manage Risk	p. 9
Additional Evidence	p. 10
Perceived Barriers to Risk Management	p. 11
Building the Business Case for ERM: Value and Benefits	p. 11
Keys to Success	p. 13
Summary	p. 15
Notes	p. 16
Corporate Governance and Roles and Responsibilities	p. 17
Board Behavior	p. 18
Corporate Culture	p. 19
Roles and Responsibilities	p. 20
Summary	p. 23
ERM Defined	p. 25
Definitions and Concepts	p. 28
Risk Categories	p. 30
Internal Environment	p. 31
Summary	p. 34
Note	p. 34
The ERM Process: Step by Step	p. 35
Strategy and Objective Definition	p. 36
Event Identification	p. 38
Risk Assessment	p. 40
Risk Response	p. 41
Communication	p. 45
Monitoring	p. 46
Oversight	p. 47
Summary	p. 47
Notes	p. 48
COSO Framework and Financial Controls	p. 49
Focus on Financial Controls	p. 49
Control Environment	p. 52
Integrity and Ethical Values	p. 53
Board of Directors	p. 55
Management's Philosophy and Operating Style	p. 57
Organizational Structure	p. 57
Financial Reporting Competencies	p. 58
Authority and Responsibility	p. 59
Human Resources	p. 60
Summary	p. 61
Notes	p. 62
Excerpt from a Code of Ethics Policy	p. 63
Our Guiding Principles and Values	p. 64
Conflicts of Interest	p. 64
Confidential Information; Intellectual Property	p. 65
Whistleblower Program	p. 67
Reports Regarding Accounting Matters	p. 67
Investigation of Suspected Violations	p. 68
Discipline for Violations	p. 68
Approval Policy and Procedures	p. 69
Policy	p. 69
Purpose	p. 69
Scope	p. 69
Approvals/Documentation	p. 70
Financial Controls and Risk Assessment	p. 74
Risk Assessment	p. 74
Financial Reporting Objectives	p. 75
Financial Reporting Risks	p. 76
Fraud Risk	p. 77
Entity-Level Controls	p. 83
Example: Risk Assessment and Financial Controls	p. 84
Evaluating Deficiencies	p. 86
Summary	p. 87
Notes	p. 87
Entity-Level Control Assessment	p. 88
Control Assessment Overview	p. 88
Control Environment	p. 90
Overall Evaluation of Control Environment	p. 95
Risk Assessment	p. 96
Overall Evaluation of Risk Assessment	p. 98
Control Activities	p. 99
Overall Evaluation of Control Activities	p. 100
Information and Communication	p. 101
Overall Evaluation of Information and Communication	p. 104
Monitoring	p. 105
Overall Evaluation of Monitoring	p. 108
Summary Assessment	p. 109
Overall Assessment of Internal Controls	p. 110
Accounts Payable: Preliminary Controls Assessment Questionnaire	p. 111
Purchasing Controls Questionnaire	p. 111
Internal Control Assessment	p. 112
Fraud Risk Factors: AU Section 316	p. 114
Risk Factors Relating to Misstatements Arising from Fraudulent Financial Reporting	p. 114
Ongoing Compliance Overview	p. 120
Origin of the Sarbanes-Oxley Act	p. 120
Generating Value from Compliance	p. 121
Moving Beyond Initial Compliance	p. 123
Reevaluating the Compliance Program	p. 125
Summary	p. 131
Ongoing Compliance Challenges	p. 132
Future State Opportunity: Compliance Optimization	p. 133
Issues to Consider When Optimizing Compliance	p. 136
Ongoing Compliance Plan	p. 138
Role of Internal Audit: Balancing the Compliance and Audit Functions	p. 143
Evolving Role of the Audit Committee	p. 145
Summary	p. 148
Addressing Compliance and Risk Management Challenges through Automation	p. 149
Software Can Add Value Beyond Compliance	p. 151
Monitoring Software	p. 152
Utilization of Continuous Monitoring: Control Testing and Control Automation	p. 153
Benefits of Continuous Monitoring	p. 154
Continuous Monitoring Tool Considerations	p. 155
Continuous Monitoring Process	p. 155
Risk Management Software	p. 157
Unifying Financial Statements, Close Tasks, and SOX Controls	p. 159
Determining the Right Solution	p. 159
Summary	p. 161
Note	p. 161
Ongoing Compliance and IFRS	p. 162
International Financial Reporting Standards	p. 162
Communicating the Impact	p. 164
Preparing for IFRS	p. 166
Comprehensive IFRS Transition Approach	p. 167
Key Elements of an Effective IFRS Implementation	p. 170
Summary	p. 172
About the Author	p. 173
Index	p. 175
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