Establishing and Maintaining Effective Internal Controls ... · Institute of CPAs and is active in...

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Remote ControlEstablishing and Maintaining Effective Internal

Controls in a “Stay at Home” EnvironmentKimberly McKinnish, CPA, SVP & CFO, National Beer Wholesalers Association

Will Donahue, CPA, Aronson LLC

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Introduction

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Kimberly McKinnish is responsible for setting financial policy and direction, managing and coordinating the association’s day-to-day financial operations, and is a member of the executive team. McKinnish also is responsible for human resources and information technology and assists with membership services. She acts in a lead role with the NBWA Next Generation of Leaders Group.Prior to her tenure at NBWA, McKinnish served 12 years as vice president and chief financial officer of King Wholesale, Inc., the exclusive Anheuser-Busch beverage distributor in three Northern Virginia counties, until its sale in 2007.In addition to 16 years of experience within the Anheuser-Busch system, McKinnishhas management and finance experience in the technology segment and with a local public accounting firm. She earned a Bachelor of Science degree from Virginia Tech in Accounting in 1984 and is a Certified Public Accountant.McKinnish participates in The Center for Association Leadership and the American Institute of CPAs and is active in her community as a Girl Scout troop leader. She recently completed a six-year term as treasurer and board member of Helping Children Worldwide, Inc., a local charity with international and domestic components, and as board member and secretary of Celebrate Fairfax, Inc.

Senior Vice President and Chief Financial Officer, National Beer Wholesalers Association

Kimberly McKinnish, CPA

800.300.6417

[email protected]



William Donahue, CPA, is a senior manager in Aronson’s Nonprofit Services Group, specializing in nonprofit clients. Will is passionate about identifying clients’ needs to help them reach their goals and carry out their mission. He leads teams in performing attestation and consulting services. Within the firm, Will is a member of Aronson’s Diversity and Inclusion Council and has contributed to the thought leadership and advisory services related to the upcoming lease standard.

Will is a graduate of Temple University’s Fox School of Business, and began his career in corporate accounting, gaining valuable insight into multiple accounting software systems, internal controls, revenue recognition processes, and cash flow management.

Senior Manager, Assurance, Aronson LLC

Will Donahue, CPA

240.364.2678

[email protected]


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Agenda

• Introduction• Risks and their impact on internal controls• Risk assessments and how to use them• Information technology- tools for success• Enhancing and improving internal controls• Communicating with your board• Conclusions


Risks and their impact on internal controls

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Risk of a breakdown in processes

Management Override of

ControlsSegregation of

Duties

Opportunities for Mistakes

Increased Fraud

Opportunity



Questions to think about

Have your processes for monitoring, reviewing, and approving transactions changed? How have changes in processes

altered your internal controls?• “Steps” added, removed, or modified?



Risk of losing control over your team

A dangerous ripple effect

Miscommunication

Lost growth and development

More work for you


Risk assessments and how to use them


Risk assessment questionnaires

• A lot of times risk questionnaires are used as a tool for outside advisors, but that shouldn’t stop you-- They can be a great internal exercise!

• Risk attitude: measures understanding of the concept of risk and how it applies to financial matters

• Risk tolerance: how much volatility and unpredictability are you willing to take?

• Risk capacity: What can you afford to risk? In other words, what can you afford to LOSE?



• A “flashy” way to convey your Organization’s risk profile– great for board presentations

• Great for analyzing different transaction areas or activities side by side

• Very actionable- helps you see where you might have “hot spots” and lets you allocate resources to address

Risk heat maps



Applying risk assessment tools

Use at any level necessary• Internally on your team• Among management• With governance

1Create an action plan• Enter with a willing attitude

open to making changes• Create timelines for

implementation

2Revisit and evaluate• Set a time to revisit and

reperform the assessment• Have things improved, or is

a different strategy needed?

3


Information technology- tools for success


• Accounting software– Cloud versus In-house server

• Process automation– How much work are you doing that you

could delegate to a machine?• Bill processing

– Vendors and Integration

Our profession is bigger than debits and credits



Questions for reflectionWhat’s one thing you are thankful for regarding information technology during

COVID-19, and what’s one thing you can’t wait to “go back to normal”?






How else can we leverage technology?

Approvals and controls in the

cloud

Bill processing

Mobile app approvals



What additional risks come into play?

Cybersecurity SOC Reports

Change management

and user controls

Updates and maintenance


Enhancing and improving internal controls


Viewing the “pandemic” as an opportunity for innovation

NOW is the time to take action if there are processes or controls that you haven’t liked

NOW is the time to argue for that newer AP module or cloud-based accounting software

NOW is the time to “look under the hood” and see if there are areas that might need some improvement



• What is the level of involvement of your governance?

• How can reporting improve to give them more robust information?

• What is the frequency of reporting?

Monitoring and reporting



Reviews and approvals

How are you documenting reviews and approvals? Is it easier or more difficult in a remote environment?

Does the process speed up or slow down in a remote environment?

It might be time to revisit expense reimbursement policies and the documentation required


Communicating with your board


Important considerations

Every board and every organization is unique, and the relationship you have with your board (and the corresponding expectations) will vary

Ask yourself, “What is my board looking for?” and “How do I feel about that?”

What are the most important things they need to know RIGHT NOW, and how often should they be updated?



Risk of breakdown in reporting

Miscommunication with your board

Breakdown in budgeting process

Board “loses touch” with financial information

Decreased ability to plan and envision the future



• How often are you reporting detailed financial information to your board?

• Do you think that’s “too much”, “too little”, or “just enough”?

Questions for reflection



• I recommend a financial package being presented to your board on a monthly basis

• Continue to monitor and evaluate your budget- does it need to be adjusted?

• What other information does your board want?– Cash flow projections?– Reserve analysis?

Financial reporting



• In times of uncertainty, we probably need more reporting and subsequent feedback– not less! What sort of cash flow projections are made available to your board?

Questions for reflection



Internal control communication

What process changes should your board be aware of?

Do policies need to be modified?

Do new policies need to be adopted?



Projections and initiatives

Are there new projects or initiatives that should be started?

Are there upgrades that ought to be made?

How will you preserve core activities related to your programs, members,

other stakeholders?

How will your transform your core activities related to your programs,

members, other stakeholders?


Key takeaways


Key takeaways

Ensure you have current, formal policies for procedures and controls to mitigate risk• It’s helpful for maintaining controls and holding your team members responsible for their individual rolesEnsure

Consider how controls are being documented• Are you utilizing a software or service where approvals are made and documented?Consider

Remember that from an auditor’s viewpoint, “If it wasn’t documented, it wasn’t done”Remember



Key takeaways (continued)

Use the technology and software available to streamline your processes• Bill processing software can make the check writing

process simpler and cleaner• Software can help centralize processes when you have

multiple employees/components to your organization

Once a process is fully documented, review it with your team• Are there redundant controls (controls that serve the

same purpose)?• Can the process be simplified? Can the same goal be

achieved in fewer “steps”?• Are current controls designed to fully address the risks

identified?



Key takeaways (continued)

Are there processes or controls that can be automated? Human touch can introduce the possibility of error

Consider how you present financial information and budget projections to your board

Encourage your board to think not just about “the destination”, but how your organization can “get there”

Think of ways to make meetings more structured and briefer so we can maximize our efficiency (and our own time)!


Conclusions


• Know the risks that impact you and your organization, and have a plan to address them

• Try something new- a risk assessment is not a bad idea if you’ve never done one

• Get to know what technology is out there, and consider how it can benefit your organization

• Don’t miss an opportunity to make the changes you need to make- it will help your organization improve

• Be strategic in your approach to your relationship with your board

Conclusions



Thanks for joining us! Any questions?

Kimberly McKinnish, CPA ([email protected])Will Donahue, CPA ([email protected])





Establishing and Maintaining Effective Internal Controls ... · Institute of CPAs and is active in...

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