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Risk Management – External Influences

Risk Management – External Influences. Piya Sen Manager, Special Projects (Financial Services) June 20, 2006 CAUBO Annual Conference 2006. Relevant Legislation – North America. Evaluation of internal control over financial reporting (ICOFR) Management certifications

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Risk Management – External Influences

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  1. Risk Management – External Influences Piya Sen Manager, Special Projects (Financial Services) June 20, 2006 CAUBO Annual Conference 2006

  2. Relevant Legislation – North America • Evaluation of internal control over financial reporting (ICOFR) • Management certifications • Listing requirements related to corporate governance Why is this relevant to us?

  3. Evaluation of ICOFR • US - SOX 404; Canada - MI 52-111 (withdrawn) • Requires: • Annual evaluation by management of ICOFR (against suitable framework) • Maintain sufficient evidence to support evaluation • Public reporting of material weaknesses ****** • Audit by external auditors (US only)

  4. Management Certifications • US - SOX 302; Canada - MI 52-109 • Requires senior management to certify that: • Annual and quarterly filings contain no misrepresentations • Annual and quarterly filings fairly present financial condition, results and cash flows … cont’d

  5. Management Certifications (cont’d) • Requires senior management to certify that they: (cont’d) • Have designed disclosure controls and ICOFR • Have evaluated disclosure controls and disclosed conclusions • Have disclosed certain changes in ICOFR ****** • Have evaluated ICOFR and disclosed conclusions (Canada only)

  6. Lessons Learned • People in management roles have implicit responsibility to manage certain risks • Forced compliance can be very costly • Voluntary compliance allows organizations to pick and choose – optimize cost/benefit

  7. COSO1 Internal Control Framework 1The Committee of Sponsoring Organizations of the Treadway Commission (1985)

  8. Case Study – Sample Project • Assess control environment • Select representative cross-campus participants • Vote on statements related to control environment (anonymous) • Assess results and determine improvement opportunities • Prioritize and implement changes … cont’d

  9. Case Study – Sample Project (cont’d) • Assess control activities • Analyze key balance sheet/income statement items • Inventory control activities and control gaps • Assess results and determine improvement opportunities • Prioritize and implement changes • Related initiative • Job profiles for senior management positions

  10. Critical Success Factors • Clear project description and objectives • Executive leadership • Commitment of appropriate resources, including project management resources • Communication with campus community • Implementation and training support for campus community

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