Internal Controls
MarkView for Accounts Payable mitigates financial errors and misstatements through robust internal controls that ensure that accounting transactions are recorded and classified accurately and in a timely fashion. By embedding best practices in the end-to-end automation of financial processes, MarkView for Accounts Payable optimizes processes and ensures enforcement of corporate policies and procedures. Proven in the world's leading organizations, MarkView is unmatched in its ability to meet the needs of Finance organizations that strive for world-class operations.
MarkView's enabling technologies – workflow and imaging, electronic invoicing, self-service solutions and ERP system integration – can dramatically improve efficiencies and service levels, deter fraud, reduce errors, ensure accurate financial statements and reduce accounting closing cycles. By eliminating paper and integrating all transaction types into standard, consistent, best practice workflows, MarkView optimizes financial transaction processing while strengthening internal controls. The result is fully automated finance operations and significantly reduced processing costs.
Strengthening Internal Controls is Not at Odds with Reducing Costs
A classic dilemma for Finance organizations is the choice between seemingly opposing goals: reducing costs while strengthening internal controls and/or improving service levels. Strengthening the controls environment has typically required increasing costs or reducing service levels, while cost reduction has frequently resulted in weakening controls and reducing service levels. The consequences of pursuing any one of these goals has been onerous enough to deter many organizations. The bottom-line pressures and compliance requirements in today's environment necessitate pursuing them.
Strengthening internal controls is a fundamental requirement of Finance organizations seeking world-class operations. With MarkView, strengthening internal controls is clearly not at odds with reducing costs and improving service levels. In fact, it is the key to dramatically improving the controls environment while positively transforming operational efficiency. MarkView is proven with tangible customer results. An independent third party, The Gantry Group, found that the MarkView suite generated an average three-year ROI of 332 percent, or $1.9 million, with an average payback of 7.4 months. Contact us now for a copy of the ROI white paper.
MarkView Financial Process Automation: Enabling Organizations to Achieve Controls Objectives
The best practice processes offered by MarkView for Accounts Payable drive superior business performance, ROI and sustainable business advantage – all within the framework of a strong controls environment. Specifically, MarkView facilitates controls objectives through:
- Enforcement of Corporate Policies & Procedures – MarkView enforces corporate policies and procedures by embedding best practice workflows into critical business operations such as Accounts Payable and Expense Management. This increases operational efficiencies and the likelihood of catching or prohibiting malfeasance.
- A Robust and Accountable Approval Framework – Timely approvals are ensured through automated routing, reminders and escalations, all of which are tracked by workflow software. Self-service access to complete transaction backup and detailed audit trails give managers a clear line of sight to make accurate approvals with a high level of confidence.
- Complete Transaction-level Backup – Properly maintaining transaction-level backup by associating all pertinent information online with the ERP record provides unparalleled visibility into financial data for approvals, reviews and audits and is a cornerstone for internal controls. The Accounts Payable (AP) best practice is to integrate all document formats and sources of transaction backup with the ERP financial system in tandem with centralized invoice received by AP. All paper invoice documentation is scanned using Kofax Capture and then indexed into the ERP system using the image instead of the actual paper document. Electronic invoices (EIPP) and EDI transactions are also captured. This permanent association of transaction-level backup to the ERP record dramatically strengthens the controls environment.
- Early, End-to-End Visibility into Financial Transactions – Central receipt of all invoices coupled with immediate front-end capture enables the earliest possible recording of liabilities and gives Finance executives the highest, more accurate visibility into AP accruals. Costs are reduced because the solution enables companies to decrease approval and review cycle times and eliminate rush invoices, allowing early payment discounts and avoiding late payment penalties. Additionally, audit trails of who did what and when are maintained continuously throughout the entire process lifecycle.
- Segregation of Conflicting Duties at the Transaction Level – While the concept is simple, systematic implementation and enforcement of segregated duties is difficult and rarely achieved. The ERP system is the logical place to start. Most systems address segregated duties through a security framework, which governs the functionality accorded to each authorized user. This classification approach is expensive to design, deploy, support, and maintain. Finance is rarely staffed to dedicate personnel to the steps in a process that should be segregated. For instance, invoice entry/invoice approval and vendor approval/invoice approval are steps that should not be performed by the same individual. As employees are promoted, reassigned or terminated, organizations must continually update their ERP systems with everyone's correct levels of authorization.
With MarkView, segregation can be enforced at the transaction level instead of the job role level, so that employees can still be allowed to perform multiple functions as long as they do not perform conflicting duties on the same transaction. Real-time monitoring of business transactions identifies potential policy violations, payment errors, system misuse and fraud, and routes the transaction for executive review and disposition, minimizing risk without sacrificing productivity or cost.
- Complete End-to-End Audit Trails – MarkView enables companies to monitor the invoice as it transitions from one step to the next. The system tracks all of the changes and maintains a comprehensive audit trail. At each point of the process, companies have a record of what was performed and by whom for all steps, enabling them to automatically catch potential conflicts at the transaction level. This fortifies the effectiveness and efficiency of a strong internal and external audit function, helping to avoid financial misstatements. Auditors can be given fingertip, self-service access to complete audit trails and backup information for every financial transaction, ensuring that controls are quickly tested, minimizing audit costs.
- Support for Internal and External Audits – MarkView provides self-service, fingertip access to complete transaction backup and audit trails and provides detailed reporting, streamlining the audit function.
- A Reduction in Processing and Accounting Errors – MarkView's best practices, capture and routing capabilities drastically reduce a myriad of error types – data entry, lost or misfiled documents and/or poor approvals – greatly reducing error rates.
Serious Risks to Controls Environment Create Liabilities
The most likely sources of risk in a controls environment are easily identified and each possesses liabilities that can compromise a Finance organization's cost effectiveness, audit quality and ability to achieve regulatory compliance. They are:
- Paper Based Processes – An organization that relies upon paper based financial processes is susceptible to messy inefficiencies and risks. According to a PricewaterhouseCoopers study, the average organization makes 19 copies of each paper document, spends $20 to file each document, loses 1 out of 20 documents, spends $120 in labor searching for each lost document and wastes 25 hours in labor recreating each lost document. In this paper based, manual environment, poor internal controls and waste are rampant in critical financial business processes such as procurement, accounts payable and accounts receivable.
In addition to an increased risk of fraud, manual, paper based processes are a breeding ground for errors. In AP, errors such as duplicate payments, overpayments and distribution coding occur due to messy, dysfunctional processes. Duplicate payments are often the result of a vendor issuing a second invoice after tiring of the wait through long cycle times resulting from inefficient processes. Overpayments typically happen because of invoice data entry errors.
- Different Processes for Different Types of Transactions – Many organizations manage transactions with different formats and/or sources, including paper, EDI, fax and electronic invoices (EIPP), each with a distinct workflow and business process. This creates an expanded controls environment, with a proliferation of key processes, resulting in process inefficiencies, the increased potential for malfeasance and higher compliance and audit costs.
- Paper Based Transaction-level Backup – The risks of using paper based transaction-level backup mirror those of relying on paper in any other process. The filing, retrieving, copying, faxing and mailing of paper documents bogs down transaction processing, makes it difficult to associate documents with an ERP financial record in an accurate and timely fashion, and creates numerous holes in the controls environment.
- Manual Approval Framework – Manual approval processes are often slow to occur, rife with mistakes and lacking in safeguards (e.g., signature verifications) due to high volumes and limited resources.
- Conflicting Duties – As made clear by countless case histories from the annals of fraud, strict segregation of duties is essential to maintaining the strongest internal controls. When duties are not properly segregated (e.g. invoice entry vs. invoice approval), strong internal controls objectives cannot be achieved.
- Inaccessible Audit History – With the requirements imposed by Sarbanes-Oxley, completing accurate, timely and cost-effective audits necessitates that records be easily verified for audits. If the processes being audited are complex, multi-step and/or manual, the audit burden is significantly increased.
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Internal Controls | ERP Financials
