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Risk & T-Recs / Exception Management

Risk & T-Recs / Exception Management. Shannon A. Parker, CPA, CGMA. Learning Objectives. After the presentation, attendees will be able to: Define the key elements of Enterprise Risk Management. Understand the current state of Enterprise Risk Oversight in organizations today.

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Risk & T-Recs / Exception Management

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  1. Risk & T-Recs / Exception Management Shannon A. Parker, CPA, CGMA

  2. Learning Objectives After the presentation, attendees will be able to: • Define the key elements of Enterprise Risk Management. • Understand the current state of Enterprise Risk Oversight in organizations today. • Identify opportunities to improve upon an organization’s approach to Enterprise Risk Oversight in T-Recs.

  3. Enterprise Risk Management (ERM) Committee of Sponsoring Organizations describes ERM as Establishing the oversight, control and discipline to drive continuous improvement of an entity’s risk management capabilities in a changing environment. Advancing the maturity of the enterprise’s capabilities around managing priority risks.

  4. AICPA’s Report on the Current State of Enterprise Risk Oversight 5th year for the study. 446 Executive level respondents 24.6% of organizations report having a complete ERM process in place. Significant opportunities remain for organizations to strengthen underlying processes for identifying and assessing key risks facing the entity especially as it relates to integrating risk oversight efforts with strategic planning activities.

  5. AICPA’s Report on the Current State of Enterprise Risk Oversight Communicating Information about Key Risks Just under half (45.1%) have no structured process for identifying and reporting risk exposures. The majority of organizations (66.3%) communicate key risks on an ad hoc basis at management meetings.

  6. Establishing a Foundation for Risk Management Key Elements of Oversight and Control • Automation • Continuous Monitoring • Identification of Risk Key Elements of Discipline • Management of Identified Risk • Standard Processes • Timely Communication

  7. Risk Management in T-Recs Enterprise • Executive Dashboards • Reconciliation Workflow • Risk Assessment • SmartResolve Procedures • Auto Account Assignment • Reporting

  8. Executive Dashboards • Management oversight from start to finish • Saved filters, can be based on risk • Highlights Exception Items based on aging • Assure all accounts are assigned, prepared, reviewed and approved within defined timelines. • Monitor progress of certification throughout close out, allows for redistribution of work • Provides drill down capability for quick access to detail

  9. Reconciliation Features Related to Risk Escalation Alerts for Overdue accounts • Throughout the entire process, not just at the end • For Roles associated with the Reconciliation • And for other individuals via email • Allows Management to respond

  10. Reconciliation Features Related to Risk Reconciliation Workflow Steps • Can be designed specifically to address risk in accounts Examples • Explain a High Risk rating • Document plan to mitigate identified risk • Review Priority Risks identified by organization • Assess Risk associated with account (outside of transactions) • Include Supporting Documentation

  11. Reconciliation Features Related to Risk Reconciliation Overview Tab • Used in conjunction with other features • Outline Management expectations • Communicate additional procedures required if risk is identified Examples • If Risk Rating=High, Preparer must address the cause for the risk rating (the risk rule applied or review of corporate priority risks) and create an action plan to mitigate assessed risk in the account. This should be entered on the Comments tab and carried forward until the risk rating falls below the High category • If the Preparer assesses risk in the account based on their review of the corporate priority risk document, notify the Corporate Risk Officer. This should be via email sent from the History tab to capture all related correspondence.

  12. Reconciliation Features Related to Risk Reconciliation Comments Tab • Used in conjunction with other features • Supports ongoing dialog on risk identified in the account • Document action plan to address risk • Document estimate of when risk should be resolved • Spans any number of reconciliation periods to track efforts and results • Can create a special Comment Type for Risk

  13. Reconciliation Features Related to Risk Reconciliation Aging Tab • Highlights exception items by aging category • Same unmatched reconciling items as the face of the recon • Provides a count and an amount by aging category • Allows drill down to transaction level of detail

  14. Risk Assessment • Continuous monitoring for defined conditions • Automation of risk rating • Reporting of risk conditions in accounts • User defined risk ratings for accounts. Displays rule or user that assigned rating. • Once rated, risk can be used in queries, recons and reports • Automated reports can be emailed, explanation is captured and retained. Risk Rating displays on reconciliation.

  15. Smart Resolve Procedures • Continuous Monitoring for defined conditions • Automation of standard procedures • Research, follow up and resolution • Removes the element of human error. • Escalation of exceptions if they remain outstanding. • All activity is captured in audit trail.

  16. Smart Resolve Procedures Components • Transaction Criteria • Regular or Expert • Select the transactions to apply procedures to • Smart Resolve Procedure • Steps (this is a title describing the action like escalate to VP after 10 days) • Criteria (if effective date is 10 days before today) • Actions (send email to VP with transactions that meet the criteria)

  17. Smart Resolve Procedures Examples of Risk Related SR Procedures • Send email reminders upcoming risk reporting deadline • Escalate aged open items to higher level for review • Ensure manual procedures are followed • Assign missing deposits for research

  18. Reports Related to Risk • Generated automatically, scheduled or run ad hoc. • Notify individuals via To Do List or email. • Online, standard, customized standard and custom built • After Risk Assessment is run or at key points during close. • Account owners can take action. Managers get up to date information delivered directly to them. • Provides drill down capability for quick access to detail

  19. Reports Related to Risk Examples of Risk Related Reports • Risk Assessment History Report • Risk Category Change Report • Risk Assessment – Unassigned Accounts Report • Recon Metrics Report • Variance Analysis Report • Account Assignment Report

  20. Thanks for your attention Contact information: Shannon A. Parker, CPA, CGMA sparker@chessys.com 443-303-8435

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