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Comparative System Approach for Trinity Industries

Name of Student

Institution Name

Date

Milestone Three: Comparative System Report Trinity Industries

Bottom-Up Approach: Strength and Weakness

PCAOB No.5 requires an organization to use the top-down approach when it comes to dealing with leading a review of the inward controls of the organization in the open market; Trinity used the bottom up approach, which offers some focal points especially in the line of SOX consistence.

It provides more details on the procedures and controls that are being used regarding operations, it gives extra data on the operational procedures of the individual BU’s, and this has made the single BU’ s to feel that they are part of the process. Though it has this entire great feature, bottom-up approach is very tedious and time-consuming in gathering and investigating each piece of information. In addition, it is very unreasonable as far as labor and capital is concerned

The top-down processing is faster, less expensive and less demanding since it does not involve point by point. It also gives less data on the operational and substance level controls, reporting and processes. For the underlying period of consistency of Trinity into the venture, the insight about their procedures and oversight looks suitable (Schultze, 2011).

Recommendation

After the documentation of procedures and controls, it was revealed several consistent holes inside the structure of Trinity Industries. In procedure by the center of 2003Q4, they had recognized, and archived 1249 controls exercise and created grouping levels, which organized the controls in light of their potential for material impact. During the testing period of executing SOX consistence, Trinity performed numerous substantive tests and controls, and they tried 2440 controls and recognized 327 crevices before the end of the year

All these gaps were identified due to documentation hence Trinity should work on the documentation of their processes in the subsequent years to reduce these shortcomings. This has been proved by the existence of several gaps from the tests that were done in the first year.

The bottom-up approach and the top-down approach are all significant in helping organizations identify and decide on the best ways to integrate management capabilities into the environment. The bottom up has a high impact on the organization, and previous investments whereas the top-down approach has delayed returns on the investment and its implications are not as much as the one by the bottom-up approach (Turner, 2014).

The most appropriate approach that Trinity should use is the top-down approach though it will have delayed returns it will eventually come to show its impact on them since the process of change is taking a period of several years. This will also help them to comply with the SOX. Each of the approaches has a different effect on the organization. The bottom has a very great change in the organization structure; it will cause changes in several areas of the structure of the organization (Forsberg, 2005). However, the top-down approach does not show any variations in the structure of the organization.

The pilot project identified several processes that need to be changed from multiple locations. Insights were projected need to be documented, controlled, and tested in multiple control environments. The pilot project complied with the SOX, as there was the formation of the steering committee and the Oracle project.

Testing processes Trinity performed were a risk assessment for individual BU’s, database application for Trinity for the central repository of all SOX controls, training documentation team on the templates that they would use and finally a control catalog for each specific processes was developed. These proper procedures would help in approaching the designed criteria. All these activities were in line to the SOX compliance.

Based on the substantive tests, the action plan for gap closure was the most efficient after its implementation. It was beneficial since out of the 280 gaps that had been identified it led to the closure of all except 3 and this was a significant step in Trinity’s accountability. These gaps had been identified in the previous phases of this process.

Memo

Trinity Industries

To: All Staff Members

From: Project Coordinator

Subjects: Results of the SOX compliance Year 1

Date: 30th May 2004

The purpose of this memo is to present the results of the 2003Q3-2004Q4 SOX compliance journey

Policy testing

The development team composing of Oracle Financials and ASC outsourcing initiatives with the help of steering committee came up with the following test:risk assessment for individual BU’s, database application for Trinity for central repository of all SOX controls, training documentation team on the templates that they would use and finally a control catalog for each specific processes was developed.

Results

From these different tests, it was determined that there was a problem with documentation, the existence of gaps, careful analysis of the financial processes should be done to ensure sufficient compliance with the SOX. The test also led to the training of different levels to help with the change management. Finally, the external audit E&Y revealed no material weaknesses but only identified 14 deficiencies

SOX related Expenses

The recommendations that would help Trinity further reduce the SOX-related expenses could be, one the company should try to centralize the Company’s decentralized IT infrastructures. Second, the company should invest in an automatic SOX controls. Third, the company should reduce the cost of catering for audit side of the control. Fourth, the company should keep backup control for SOX in case one of the checks fails. Lastly, Trinity Industries should begin to apply for BPCS programs in an ERP system to integrate accounting, production scheduling, distribution, and manufacturing functionality (Schultez, 2011).However, all the above recommendations come with barriers to the organization since most of them requires finance yet we are trying to reduce the SOX-related expense in the year 2008.

The major sources of cost in Trinity Compliance maintenance and testing are profit and revenues that were acquired from the sales and incomes that were made from the sales. These costs were used to purchase equipment’s that are necessary for the organization. Trinity is running on three different versions of BPCS and relies on a variety of IT companies to support them (Schultze, 2011).Ranking of each of the major sources regarding value is as follows: incomes made from the sales and secondly the profits and revenues acquired from the sales that were made in the process of the sales. All these sources are important as they help the organization obtain the requirements for the nest stage

Oracle was selected as sale management software. This software was proven to be very effective in helping the organization when compared to others in the market. It also offers the best sales solutions. Sale force software similar to Oracle has the advantage of having the capabilities to use the sales of the company to generate a transaction in a very efficient way. Though it has these abilities, it does not offer customer management platforms which are found in Oracle. Software similar to Oracle is Rimini Streets, which has a very effective mobile UI. It does not fail to have a disadvantage since it does not have predictive analytics found on Oracle, which can create good sales workforce (Wei et al, 2005)

After looking for other software, Oracle has remained to be the better choice since it offers a range of services like the cloud storage where the company can store unlimited data. Oracle should be the software that the organization maintains.

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References

Forsberg, K., Mooz, H., & Cotterman, H. (2005). Visualizing project management: models and frameworks for mastering complex systems. John Wiley & Sons.

Schultze, U. (2011). The SOX compliance journey at Trinity Industries. Journal of Information Technology Teaching Cases.

Turner, J. R. (2014). The handbook of project-based management (Vol. 92). New York, NY: McGraw-hill.

Wei, C. C., Chien, C. F., & Wang, M. J. J. (2005). An AHP-based approach to ERP system selection. International journal of production economics.