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Contents. Our understanding of Halliburton’s needs Why choose PricewaterhouseCoopers? Roles and responsibilities Our approach Tools and technology Our team Client list Fees. Our Understanding of Your Needs. Halliburton needs: Project management

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  1. Contents • Our understanding of Halliburton’s needs • Why choose PricewaterhouseCoopers? • Roles and responsibilities • Our approach • Tools and technology • Our team • Client list • Fees

  2. Our Understanding of Your Needs Halliburton needs: • Project management • Assistance scoping the controls assessment • Understanding of roles, key steps, options, and best practices • Right size of team that complements your resources • Advisors experienced in controls assessments • Global Resources • Right tool to document and map processes/controls to COSO • Commitment to September 30, 2003 deadline

  3. Why Choose PricewaterhouseCoopers? • Developed original COSO framework • Deep industry knowledge as leading service provider to oilfield services companies globally • Thought leader on Sarbanes-Oxley • Developed technology tools specifically for S-O 404 • Performing numerous projects for OFS industry (and across other industries), for audit and non-audit clients • Global resources to help you wherever needed • Strong systems and SAP skills, including controls tools • Right tools - Internal Controls Workbench and Global Best Practices

  4. A Word About COSO No firm understands the COSO framework as well as PricewaterhouseCoopers. • 10 years ago we authored the report for COSO– a consortium of leading organizations dedicated to improving the quality of financial reporting. • COSO awarded PricewaterhouseCoopers an engagement to develop an enterprise-wide risk management framework. • We expect that the project will be completed and the formal report published in June 2003.

  5. Roles and Responsibilities Halliburton Disclosure Committee Steering Committee Halliburton VP and Controller R. Charles Muchmore, Jr. Halliburton Director - Audit Services Dennis Croysdale KBR Chief Financial Officer Bruce Stanski Others PwC Advisor Perry Elders External Auditor KPMG Halliburton Program Office Core Project Team Comprised of ESG and KBR members Subject Matter Specialists Company Resources: PwC Subject Matter Specialists: • Finance Managers • Operations Management • Information Technology • Internal Audit • SEC Attorney(s) • Engineers • Construction Specialists • Manufacturing Specialists • Internal Controls • Process Specialists • Information Technology/SAP • Others as needed 5

  6. Disclosure Committee Membership Chief Financial Officer Corporate Controller Audit Committee Chairman Scope: Steering Committee Membership: Corporate Controller Director - Audit Services ESG/KBR CFOs/Controllers Scope: Weekly debriefings with Core Team Reports to Disclosure Committee Roles and ResponsibilitiesBest Practice - Disclosure Committee vs. Steering Committee 7

  7. Core Project Team Membership Project Manager from ESG and KBR Various business and process specialists Scope: Work alongside PwC Provide business unit/operational insights PricewaterhouseCoopers Membership: Engagement Partner and Core Team Subject Matter Experts Scope: Project Management Technical and strategic consultants Full time, on-sight consultants Development of project plans and tasks Roles and ResponsibilitiesCore Project Team and PricewaterhouseCoopers 8

  8. Proposed Project Execution Plan 9

  9. Stage 1 Mobilize And Plan Stage 2 Document Map to COSO, Identify Gaps, and Remediate Stage 3 Management Testing Stage 4 External Auditor Attestation Stage 5 Continuous Improvement Our Approach Five key stages of proven structured approach: Phases for Stage 1 • Our approach is designed to: • Further define roles of Core Project Team • Help quickly evaluate options • Reach consensus • Provide near-term work plan and ongoing assessment plan 10

  10. This will need to be rebuilt for Halliburton (VCN job). 11

  11. Sizing the Internal Controls Environment • What needs to be done? • Inventory the Company’s processes, systems and controls: • Assess internal control priority/impact by area based on Company risks and business • Assess the Company’s internal control maturity by area and in total • Define and direct the work effort to locations/activities/processes based on the assessed internal control priority and maturity • Validate control environment and risk assessment • We can help... • Using our methodologies, we can assist in: • Defining internal control priorities/impacts by area based on best practices and experience • Assessing the Company’s internal control maturity by area and in total • Allocate resources to locations/activities/ processes based on need from the assessed internal control priority and maturity • Prepare and conduct risk culture survey - including foreign locations  With 125,000 professionals in 142 countries throughout the world, including 9,400 partners, we can assist you wherever you need our help. Halliburton’s extensive global locations will be one of the challenges you face in sizing your internal controls environment. 12

  12. What needs to be done? Assess the level of control documentation required Document the “as is” design of controls in each COSO subcomponent for selected locations, activities and processes For processes and controls at selected locations, document “as is” design We can help... Review your level of documentation and recommending standard documentation format Document current state controls for identified locations, activities and processes Identify processes and controls for inclusion in current state assessment Documentation  The documentation of internal controls will have to be “auditable” by a 3rd party since an attestation will be required for 2003 filers. Are controls currently on paper?  Through interviews with key personnel, we can assist you in documenting processes and controls not currently documented. 13

  13. Process Maps and/or Detailed Procedures Memos Summary Memos Extracts of internal and external audit work Bullet point summaries Process Outputs 5 4 3 2 1 High Medium Low Level of Required Documentation Control / Process Documentation Impact Targeted Maturity 14

  14. What needs to be done? Compare “as is” design to COSO framework model Document control gaps, distinguishing: Gaps requiring immediate remediation prior to S-O 404 certification Gaps to be addressed as part of continuous improvement We can help... By providing our Internal Control Workbench tool which is mapped to COSO. It can provide a central repository for policies, pro forma templates, forms etc, obligations, controls and procedures. It enables division of responsibilities – clearly presented to end users Document control gaps using our expertise from a wide range of related engagements Map to COSO and Identify Gaps  Are current processes adequate to identify and allow 8-K reportable events within 2 days of occurrence?  Our thorough knowledge of the industry and COSO will prove indispensable in this analysis. 15

  15. What needs to be done? Develop and monitor remediation plans to address control weaknesses and gaps identified (including responsible parties, agreed actions and completion dates) Assess adequacy of operation of internal controls for S-O 404 certification We can help... Provide insight into effective means of addressing control weaknesses and gaps identified Provide specialists to address specific control weaknesses Fix Gaps and Improve Controls  While Halliburton may not have significant gaps, identifying and improving any that exist early in the process is key.  With our experience in risk management and controls we will share ideas on where gaps often occur or can be overlooked, as well as the best ways to correct them. 16

  16. What needs to be done? Design and execute testing programs to validate whether key controls are functioning as documented in an effective manner We can help... Assist with testing the internal controls As previously mentioned, our Internal Control Workbench tool is used to document the controls testing Testing  Test controls across business and functional areas to opine on effectiveness  Our tools have proven value at other companies where they are currently being utilized. For example, locations can be mapped to the organization structure of the client to capture internal control documentation for multiple locations. 17

  17. Steering Committee Key Decisions • Evaluation framework - COSO • Tool for mapping to COSO • Identify Key Financial Processes (KFPs) • KFP priority • KFP target maturity • Level and form of KFP documentation • Locations and processes to be documented and mapped to COSO • Testing scopes • Control gaps to be remediated prior to certification • Overall certification recommendation to Disclosure Committee

  18. Key Challenges • Time and global resources to complete project by September 30, 2003 • Documentation • For many companies, processes are not formally or uniformly documented • Mapping to COSO • Control improvement • Systems alignment • Joint ventures (for companies like Halliburton)

  19. Addressing Key Challenges PricewaterhouseCoopers offers: • Full time resources to complete project on-time • Global resources we can call on where you operate • Detailed work plan to address documentation options and best practices • Scope and methodology for mapping to COSO • Systems specialists to address issues/needs

  20. Halliburton - 100 Countries Africa 11 countries Asia 10 countries Australia / Asia Pacific 11 countries Europe 14 countries Middle East 7 countries North America 8 countries Latin America 8 countries Number of countries from Halliburton website PwC - 142 Countries Africa 26 countries Asia 21 countries Australia / Asia Pacific 6 countries Europe 43 countries Middle East 13 countries North America 15 countries Latin America 18 countries Aligning Global Resources

  21. Tools and Technology Internal Controls Workbench • The Workbench is a technology enabler designed to facilitate consistent documentation and assessment of internal controls for clients. • Facilitates the mapping of your system of internal control to the COSO framework. • Supports management’s ongoing certification and reporting responsibilities. • The Workbench is web enabled. • The Workbench is populated with the COSO framework. • The Workbench serves as a central repository. • The Workbench enables allocation and division of responsibilities as well as accountability for internal controls. • The Workbench can be tailored to client specific, unique business processes, control objectives, risks, and control activities.

  22. Tools and Technology Internal Controls Workbench, continued • The Workbench can be configured to accommodate changes to the proposed internal control framework. • The Workbench can be used to document tests of controls, capture issues related to control activities and risks, and develop action plans to address those issues. • The Workbench has a number of useful views to allow a client to see their documented controls. • Initially, the Workbench will be hosted by PwC. In about 2 months, a SQL version will be released to allow hosting at client sites or by a 3rd party service provider.

  23. Hierarchy COSO Structure Internal Control Workbench Structure COSO Component Control Activity Cycle Revenue and Receivables Transaction The PROCESS Transaction Order Processing Control Objectives Control Objective Process Only Valid Orders Risks Issues Risk Orders may not be authorized Control Activities Action Plans Control Activities Your unique control activities Testing 25

  24. Views: All Documents List of Views All documents menu selection allows multiple views/sorts of created documents. 26

  25. Reports and Additional Views The Reports menu allows access to basic ad-hoc reporting functionality. Selected document information can be formatted for output/export to Excel, XML, or Word. Ability to select the desired document type for reporting. Additional views for the Gap Analysis, Issues and Action Plans Every field from the selected document type can be selected and ordered for output.

  26. Internal Controls Workbench 28

  27. Tools and Technology Global Best Practices • Dissects best practices into 13 business process categories • Operating Processes represent composite of all activities related to acquiring and serving customers • Management Processes include all other functions

  28. Global Best Practices 25

  29. Our Team Firm Leaders Ron Knecht National Sarbanes-Oxley Partner Alvin Bledsoe Houston Office Managing Partner Subject Matter Experts Gary Prasher Risk & Control Partner Ray Slocumb Information Technology / Controls Partner PricewaterhouseCoopers Core Team Perry Elders Lead Partner Doug Cogan Engagement Manager ESG Doug Cogan Lead Manager KBR Lanyard Sledge Lead Manager We have presented a Houston-based team to serve this engagement initially. International and other domestic resources will be used as needed. 6

  30. Our Core Team • Perry Elders - Engagement Partner • 20 years of oilfield services industry experience • Member of our core Sarbanes-Oxley task force • Extensive experience in leading global engagements • Doug Cogan - Risk and Control Senior Manager • Specializes in delivery of risk and control management services to Energy industry • Strong knowledge of our Sarbanes-Oxley methodology and tools • Focuses on integrated information systems risk within energy industry - specialist at ERP implementations and related technology risks • Lanyard Sledge - Risk and Control Manager • Skilled manager with over 20 years of internal audit and risk management experience in the energy and technology industries • Focused on areas such as financial reporting, internal controls Detailed biographies of team members are included in Attachment B

  31. Subject Matter Experts • Gary Prasher - Risk and Control Partner • Leader of our Sarbanes-Oxley compliance practice • Deep energy industry focused on risk and control • Extensive experience in global engagements • Ray Slocumb - IT and Controls Partner • Specializes in leading risk and control services related to IT for Energy industry • Conducted and managed many audits covering areas of general controls, application controls, LAN controls, quality assurance, system development life cycle, data security, change control and contingency planning • Over 13 years of IT experience Detailed biographies of team members are included in Attachment B

  32. Firm Leaders • Ron Knecht - National Sarbanes-Oxley Leader • National Leader of our Sarbanes-Oxley compliance practice • Deep energy industry focused on risk and control • Thought leadership on Sarbanes-Oxley methodology and risk management • Al Bledsoe - Houston Office Managing Partner • Lead partner in Houston office responsible for client satisfaction • Will assist team in identifying best global resources for Halliburton engagement • Three decades of experience in financial accounting in energy and oilfield services industry Detailed biographies of team members are included in Attachment B

  33. Audit Clients Dana Corporation Eastman Kodak El Paso Energy Haggar Humana JP Morgan Kulicke & Soffa Marathon Moody’s Corporation Noble Drilling Ominicare Pride Sara Lee Schlumberger United On-line, Inc. Non-Audit Clients Amdocs BJ Services Entergy Invacare Monsanto Microsoft Nicor ShopNBC.com/ (ValueVision Media, Inc. Vivendi Universal Toyota Financial Services Client ListWe are assisting with Sarbanes-Oxley 404 services

  34. Fees • We sincerely want to serve Halliburton in the Sarbanes-Oxley Section 404 compliance project • We do not want our fees to be an issue • Although we cannot offer a lump sum for the entire project, we are willing to provide a Stage 1 fee, and use hourly rates for subsequent stages • We quote US rates below. Individual hourly rates for international personnel will have to be determined based on the nature of work to be done, skills required and geographic location. • US Hourly Rates: • Partner $385 • Director $360 • Senior Manager $330 • Manager $300 • Senior Associate $190

  35. Why Choose PricewaterhouseCoopers? • Developed original COSO framework • Deep industry knowledge as leading service provider to oilfield services companies globally • Thought leader on Sarbanes-Oxley • Developed technology tools specifically for S-O 404 • Performing numerous projects for OFS industry (and across other industries), for audit and non-audit clients • Global resources to help you wherever needed • Strong systems and SAP skills, including controls tools • Right tools - Internal Controls Workbench and Global Best Practices

  36. Attachment ADetailed Work Plan - Stage 1

  37. Attachment BDetailed Biographies

  38. Attachment CCross Reference to RFP

  39. Halliburton asked... Presentation of firm’s technology tools to be utilized Firm’s proposed project execution plan Firm’s expectations of Halliburton as to personnel resource requirements Key challenges in becoming compliant with S-O 404, including those specific to Halliburton Best practices regarding Steering Committee composition, functions and operating style Interrelationships between Disclosure Committee and Steering Committee Range of options pertaining to internal control documentation Fee structure Identify key personnel and their locations assigned to this project Listing of current clients utilizing PwC to assist them in Sarbanes-Oxley Act Section 404 compliance Differentiating aspects of our firm See page.... Cross Reference to RFP

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