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Runninga Head:a ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a
6-1a Finala Projecta Milestonea Three:a Comparativea Systemsa Report
ACC675
SNHU
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 2
Thea drafta comparativea systemsa reporta givesa ana insighta intoa Trinitya Industries’a electronica
dataa processinga system.a Baseda ona substantivea testing,a thea accuracya ofa itsa financiala informationa hasa
beena checked,a anda suitablea recommendationsa havea beena madea toa strengthena itsa internala controls.a
IV.a Bottom-Upa Approach
Strengthsa anda Weaknesses
Thea maina strengtha ofa thea bottom-upa approacha thata wasa adopteda bya Trinitya ina thea firsta yeara
wasa thata thea insighta ofa organizationala membersa asa takena regardinga thea controlsa anda processes.a Ita
gavea thea managementa aa ground-levela insighta intoa thea measuresa thata werea ina place.a However,a thea
maina weaknessa ofa thea bottom-upa approacha fora internala controla wasa thea over-costa relatinga toa SOCa
compliance.a Ina thea contexta ofa Trinity,a nonea ofa thea identifieda controla gapsa (265a gaps)a hada beena
identifieda asa higha priority,a baseda ona thea bottom-upa approach.a Thea approacha wasa effectivea sincea
therea existeda noa weaknessa ofa materiala ina thea initiala yeara relatinga toa SOXa compliance.a
Recommendations
Ina Yeara 1,a thea maina thinga thata thea companya coulda havea donea differentlya wasa toa usea thea top-
downa approach.a Ita woulda havea helpeda Trinitya Industriesa toa havea bettera controla overa thea existinga
controla mechanisms.a Ita isa ana ideala alternativea sincea ita woulda havea enableda thea companya toa
minimizea thea workloada whilea reducinga thea expensesa relatinga toa SOXa compliance.a Ita woulda havea
helpeda toa understanda thea overalla riska pertaininga toa internala controla overa financiala reportinga
(Viewpointa :a PWC.a Viewpoint,a 2022).a
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 3
Comparisona witha top-downa riska approach
Thea top-downa approacha isa aa risk-baseda approacha thata focusesa ona allocatinga resourcesa ona
thea specifica areasa wherea therea isa aa probabilitya ofa highera risk.a Aa thorougha understandinga ofa aa firm’sa
financiala reportinga risksa isa ofa higha importancea (Deloittea Us:a Audit,a Consulting,a advisory,a anda Taxa
Services.a Deloittea Uniteda States,a 2021).a Thisa simplea methoda reliesa ona historicala data.a Aa majora
weaknessa isa thata ita createsa differencesa betweena thea teama membersa anda decision-makers.a Thea
bottom-upa approacha considersa everya riska toa bea ofa equala importance,a soa ita isa nota possiblea toa
prioritizea risks.a Ina ordera toa givea aa comprehensivea insighta intoa aa risk,a thea processa takesa aa
considerablea amounta ofa timea anda resources.a
Compliancea project
Ina thea firsta year,a thea adoptiona ofa thea bottom-upa approacha wasa morea appropriatea fora
completinga thea compliancea projecta successfully.a Asa thea SOXa compliancea requirementa wasa aa fairlya
newa concepta fora thea business,a sucha aa detaileda processa workeda wella fora thea companya anda helpeda ita
toa geta familiara witha thea newa seta ofa regulations,a i.e.,a thea Sarbanes-Oxleya Acta (SOX)a (Bottom-upa
approacha fora compliance:a Thea mastera position.a emmanuela .a W3,a 2009).a
Impacta ona thea internala controla structure
Whena thea top-downa approacha isa adopteda toa managea internala controls,a thea seniora
managementa hasa thea responsibilitya toa developa suitablea internala controls.a Thesea controlsa doa nota liea
withina thea normala ora generala perceptiona relatinga toa normala controls.a Theira involvementa isa criticala
toa impacta thea effectivenessa ofa thea internala controla structurea (Savea Moneya ona Sarbanes-Oxleya
Sectiona 404(a)a Compliance.a Marmanna &a Associates,a P.C.a -a Certifieda Publica Accountantsa &a
Consultants,a 2021).a Whena thea bottom-upa approacha isa adopted,a thea rolea ofa leadersa isa restricteda
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 4
sincea theya area nota directlya involveda ina formulatinga thea internala controla structure.a Thea teamsa anda
organizationala membersa area thea onesa thata deploya controla measuresa anda area responsiblea fora framinga
thea internala controla structurea thata isa adopteda ina organizations.a
Chiefa insights
Thea pilota projecta thata wasa conducteda ata Trinitya Industriesa wasa highlya insightful.a Ita sheda
lighta ona thea gapsa thata existeda relatinga toa thea internala controls.a Bya conductinga thea pilota study,a thea
businessa wasa ablea toa ascertaina thata therea existeda severala controla gapsa ata diversea levelsa withina thea
organization.a Ita alsoa revealeda thata therea existeda gapsa betweena thea AS-ISa practicesa anda thea
SOXcomplianta mannera ofa operating.a Ita serveda asa aa foundationa fora conductinga ana in-deptha gapa
analysis.a Testinga processes
Thea specifica testinga processesa thata werea carrieda outa bya Trinitya toa ensurea compliancea
includeda analyticala tests,a inquirya anda observations,a testsa ofa transactions,a anda testsa ofa balances.a Thea
rolea ofa eacha ofa thesea substantivea testsa wasa ofa paramounta importancea sincea theya helpeda toa locatea
loopholesa thata existeda ina thea existinga processesa anda protocols.a Whilea performinga thea tests,a Trinitya
starteda witha thea initiala transactionsa anda thena moveda upwardsa towarda thea financiala statementsa ofa thea
company.a Baseda ona thea bottom-upa approach,a ita wasa ablea toa identifya aa totala ofa 265a gapsa thata neededa
toa bea filleda toa improvea thea internala controls.a Thea companya faileda toa takea appropriatea approacha
measuresa ina designinga thea controlsa since,a ina Junea 2004,a 1573a ofa itsa controla activitiesa brokea down.a a
Thea mosta usefula testinga process
Thea mosta usefula testinga processa thata wasa carrieda outa bya thea company,a whicha helpeda ina
assessinga itsa accountinga systema wasa gapa analysis.a Bya performinga aa detaileda gapa analysis,a thea
companya wasa ablea toa identifya 1249a controla activitiesa alonga witha 265a gaps.a Ita furthera sheda lighta ona
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 5
thea facta thata outa ofa thea 265a gaps,a 172a werea relateda witha documentation,a anda nonea ofa thea gasa hada
beena categorizeda asa higha prioritya risks.a
Recommendations
To:a Trinitya Industriesa management
From:a Auditinga team
Date:a Decembera 13,a 2022
Subject:a Resultsa ofa thea firsta yeara ofa testinga anda recommendations
Thea resultsa ofa thea firsta yeara ofa testinga ata Trinitya Industriesa showsa thata therea existsa
considerablea gasa relatinga toa internala controls.a Ita cana affecta itsa abilitya toa complya witha thea SOXa
regulationsa anda requirementsa ina thea future.a Althougha thea bottom-upa approacha wasa suitablea ina thea
firsta year,a ina thea subsequenta years,a ita mighta nota helpa thea companya toa havea ana effectivea controla overa
itsa internala controls.a
Baseda ona thea in-deptha analysis,a thea recommendationa thata hasa beena madea fora Trinitya isa thata
ita musta adopta aa top-downa riska approacha ina subsequenta years.a Thisa approacha willa helpa thea company,a
especiallya itsa leaders,a toa developa robusta internala controlsa thata cana helpa ina identifyinga gapsa thata maya
diminisha thea effectivenessa ofa thea internala controls.a
Thanka Youa
V.a SOX-relateda expensesa
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 6
Recommendationsa fora furthera reducinga SOX-relateda expensesa
Fora reducinga thea SOX-relateda expensesa ina thea yeara 2008,a Trinitya musta replacea itsa foura
generala ledgera packagesa witha Oraclea Financials.a Ita hasa beena estimateda thata thea Oraclea solutiona willa
enablea thea businessa toa savea $a 0.5a milliona ona SOXa compliancea expenses.a Centralizationa ofa
accountinga transactionsa cana helpa toa havea bettera controla overa thea financiala aspects.a Thea manuala
SOXa controlsa musta bea replaceda witha ana automateda solution.a Althougha ita cana increasea thea costa
burdena fora Trinity,a ina thea longa run,a ita woulda generatea favourablea results.a Thea businessa musta trya toa
reducea itsa costsa relatinga toa itsa currenta ITa systema anda BPCSa soa thata thea activitiesa cana bea carrieda outa
ina aa centralizeda anda standardizeda manner.a
Majora sourcesa ofa cost
Onea ofa thea majora sourcesa ofa thea costa thata Trinitya willa havea toa incura relatinga toa itsa
compliancea maintenancea anda testinga relatesa toa thea Oraclea initiative,a whicha isa wortha $a 28a million.a
Similarly,a thea businessa hasa toa maintaina anda testa diversea controla environments,a includinga businessa
specifica applicationsa anda ITa supporta ina Europea anda Mexico.a Thisa woulda alsoa acta asa aa majora sourcea
ofa costa fora thea company.a Asa BPCSa operatesa ina sevena diversea locations,a thea development,a
maintenancea anda testinga ofa thea controlsa ina eacha ofa thea locationsa woulda leada toa thea magnificationa ofa
thea businessa costsa toa aa significanta extent.a
Rankinga ofa maina sourcesa ofa cost
Thea maina sourcesa ofa costa ina thea contexta ofa Trinitya Industries’a ina termsa ofa valuea include:
• Oraclea initiativea
• Accountinga Servicea Centera (ASC)a projecta
• Maintenancea anda testinga
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 7
Comparisona ofa thea softwarea system
Oraclea hasa beena selecteda asa thea ultimatea softwarea systema thata cana bea introduceda ina Trinitya
Industries.’a However,a itsa advantagesa anda disadvantagea havea beena compareda witha thata ofa twoa othera
systemsa includinga SAPa anda Microsofta solutions.a
Oracle
SAP
Microsoft
Reporting
Improveda
reportinga
effectiveness
Gooda reportinga
control
Robusta
reportinga
mechanisms
Timea efficiency
Timelya
closurea
ofa books
Thea booka closurea
processa cana bea
manuallya changeda
Time-efficienta
procedures
Information
Bettera availabilitya ofa
financiala informationa
Higha informationa
availability
Higha informationa
availability
Cost
Affordablea cost
Higha cost
Higha cost
Selectiona ofa Oraclea
Baseda ona thea comparisona betweena diversea softwarea systemsa thata cana bea introduceda ina thea
businessa context,a Oraclea hasa beena identifieda asa thea ideala softwarea systema fora Trinitya Industries.’a Ita
cana playa aa vitala rolea ina managinga thea accountinga transactionsa ofa thea businessa asa wella asa thea
accuracya ofa thea financiala detailsa thata area reporteda ina aa cost-efficienta manner.a Onea ofa thea maina
reasonsa fora identifyinga Oraclea isa taa ta eha innovativea systema isa aligneda witha thea exacta needsa ofa thea
business.a Anothera vitala reasona fora choosinga Oraclea isa thata ita isa aa mucha morea affordablea optiona asa
compareda toa thea alternativea optionsa thata area availablea ina thea marketa anda thea currenta systema thata thea
companya hasa ina placea toa controla itsa accountinga transactionsa asa wella asa processes.a Ita isa aa suitablea
systema thata cana meeta thea businessa needsa effectively.a
ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 8
References
Bottom-upa approacha fora compliance:a Thea mastera position.a emmanuela .a W3.a (2009).a Retrieveda
Decembera 13,a 2022,a froma https://www.w3.org/2009/policy-ws/papers/Pigout.pdfa
Deloittea Us:a Audit,a Consulting,a advisory,a anda Taxa Services.a Deloittea Uniteda States.a (2021).a
Retrieveda Decembera 13,a 2022,a froma https://www2.deloitte.com/a
Savea Moneya ona Sarbanes-Oxleya Sectiona 404(a)a Compliance.a Marmanna &a Associates,a P.C.a -a
Certifieda Publica Accountantsa &a Consultants.a (2021).a Retrieveda Decembera 13,a 2022,a froma
http://www.marmanngroup.com/news/print_mm_analysis.htmla
Viewpointa :a PWC.a Viewpoint.a (2022,a Decembera 8).a Retrieveda Decembera 13,a 2022,a froma
https://viewpoint.pwc.com/us/en.htmla
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