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InternalAudit
Sony
Internal
AuditPresentationto
ISACATokyo
Chapter
Tuesday,March12,2013
InternalAuditDepartment
SonyCorporation
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InternalAudit
Agenda
CaseStudy:AuditableRisksandProcedures3 AdvertisingandPromotion,DataAnalytics,Logistics,BPO
OverviewofSonyCorporation OverviewofSonyCorporationandHighlightsofFinancialResults
SonyInternalAuditDepartment2 IAStructure,GlobalAuditableRisks,ResourceAllocation,OffshoreSupport
2
1
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InternalAudit 3
Overview
of
Sony
Corporation
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InternalAudit 4
CorporateData
CompanyName: SonyCorporation
Headquarters: 171Konan,Minatoku,Tokyo
Founded: May7,1946
ConsolidatedSalesandOperatingRevenue: 6,493,200millionyen(FY2011)
Headcount: 162,700(asofMarch31,2012)
ConsolidatedSubsidiaries: 1,267
(as
of
March
31,
2012)
Overview
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InternalAudit 5
SonyCorporateHistory Overview
1946MayTokyoTsushinKogyoK.K.(TokyoTelecommunicationsEngineeringCorporation),alsoknownasTotsuko,establishedin
Nihonbashi,
Tokyo.1958January
1961June
CompanynamechangedtoSonyCorporation.
SonybecamethefirstJapanesecompanytooffersharesintheUnitedStatesintheformofAmericanDepositaryReceipts(ADRs)ontheOTCmarketoftheNewYorkStockExchange.
1979AugustSonyPrudentialLifeInsuranceCo.Ltd.,a5050jointventurewithPrudentialInsuranceCo.ofAmerica,established.ItwasrenamedSonyLifeInsuranceCo.Ltd.inApril1991.
1988January CBS
Records
Inc.
the
records
group
of
CBS,
acquired.
It
was
renamed
Sony
Music
Entertainment
Inc.
1989November ColumbiaPicturesEntertainment,Inc.acquired.ItwasrenamedSonyPicturesEntertainmentInc.
1993November SonyComputerEntertainmentInc.established.
1995November SonyCommunicationNetworkCorporationestablished.ItwasrenamedSonetEntertainmentCorporation.
2001April SonyBankestablishedinJapan.
2003June
2004April
Corporateshifttocommitteebasedorganizationalmodel.
SonyFinancialHoldingsInc.established.
2009September
2010June
SonyGroupunveilsnewbrandmessage"make.believe.
SonylaunchesNEXseries,theworld'ssmallestandlightestinterchangeablelensdigitalstillcameraseries.
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InternalAudit 6
SonyBusinessSegments Overview
Source:AnnualReport 2012(YearEndedMarch31,2012)
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InternalAudit 7
SonyGroupConsolidatedResults Overview
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InternalAudit 8
SonyInternalAuditDepartment
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InternalAudit 9
InternalAuditOrganization IADepartment
In2003,SonyadoptedtheCompanywithCommitteescorporategovernancesystemundertheCompanies
Actof
Japan.
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InternalAudit 10
InternalAuditOrganization IADepartment
OrganizationalindependencethroughdottedreportinglinetoAuditCommittee,anddirectlinetoEVP.
GlobalPlanningOffice
Audit
Committee
Top
Management
CorporateExecutiveOfficer,ExecutiveVicePresidentandGeneralCounselCorporateExecutiveOfficer,ExecutiveVicePresidentandGeneralCounsel
SeniorGeneralManager,HeadofGlobalInternalAuditSeniorGeneralManager,HeadofGlobalInternalAudit
SoMC SFHGroup
GlobalInternalAuditManagementTeamGeneralManagerandHeadofRegionalInternalAuditOffices
LatinAmerica
CAD(SCA)
Electronics
Music
Pictures
GAO(SCE)
SCEI
SCEA
SCEE
Japan
IAD
Europe
AsiaPacific
China
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InternalAudit 11
PurposeofInternalAudit IADepartment
Identifycriticalissues
Escalate tosenior
management
Makerecommendations for
improvement
Strategy
Execution
Audit
Abilityto:
IADs Mission: Identify Gaps Between Strategy and Execution
The Internal Audit Department (IAD) establishes and maintains the internal audit organization and internal audit activities
and formulates internal audit policies for the Sony group.
IAD plans and executes its activities utilizing a riskbased approach for the purpose of providing an objective and independent
assessment on governance, risk management and control processes for the Sony group.
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InternalAudit
RiskAssessment
Audit
StakeholdersGlobal Key Risks
Regional Risks
Planning
Fieldwork
Reporting
Consolidated
Reporting
Benchmarking
Good Practice
Issues
HQ
Region
Reporting
Concern
Request
StandardAuditProgram
CAAT
Tool
ExternalResources
12
InternalAuditProcess IADepartment
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InternalAudit 13
HistoryofSonyInternalAuditDepartment IADepartment
1997GlobalInternalAudit
1999RiskbasedAudits
SonyGroupG
lobalKeyAuditableRiskArea
s
GlobalInternalAuditCharter
GlobalIssueT
racking
GlobalAuditSummaryReporting
Renamedthe
InternalAudit
Department(IA
D)
AuditCommittee
establishe
dinSonyCorpo
ration
InternalAuditOfficeestablis
hedinLatinAm
erica(IALA)
InternalAuditOfficeestablis
hedinChina(IA
C)
Renamedthe
GlobalAuditD
epartment
StartedKnow
ledgeSharing
FirstRiskAsse
ssmentforSon
ygroup
InstituteofIn
ternalAuditors
JapanChairma
n'sAward
GlobalIntern
alAuditPolicyDeveloped
InternalAuditOfficeestablis
hedinSingapore(IAAP)
InternalAuditOfficeestablis
hedinEurope(IAE)
FirstSonyInternalAuditNew
sletterIssued
InternalAuditFunctionsepa
ratedfromAccounting
InternalAuditOfficeestablis
hedinAmerica
(SCA)
InternalAuditFunctionesta
blishedinAcco
unting
1968 1987 1993 1996 98992000 2002 2003 200405092011
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InternalAudit 14
GlobalCoordination
GlobalInternal
Audit
Structure:
Howtofocusonbettercoordinationi)amongIAofficesandii)withotherauditactivities?
Audit Collaboration
Collaboration withRegional Internal Audit
Regional Meeting /
Global Internal AuditLeaders Meeting
Central Support Team(CST)
Joint audit team with diversified experts from regional internal audit offices:
Collaboration with regional internal auditors in audit activities, e.g.
Scheduling Risk/scope assessment
Internal knowledge-sharing
Regional meeting held to share knowledge and experience among internal auditoffices, and conduct audit planning workshops
Quarterly Regional Meeting Annual Internal Audit Leaders Meeting
Established CST team in India, consisting of 6 members with professionalbackgrounds, centrally support the global audit activities in terms of:
Data analysis by CAAT tool
Information Security
System controls and IT projects management
IADepartment
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InternalAudit 15
Resource sharing is essential to share expertise and knowledge of the audit process in
realityAudit Resources
Nordic Europe,Japan
India AsiaPacific,Japan,Europe
Japan Japan,Europe
SouthChina Japan,AsiaPacific,Europe
HongKong Japan,Europe,AsiaPacific
PanAsia Japan, Europe,CentralSupportTeam
Japan Japan,Europe,CentralSupportTeam
Japan Japan,Europe,CentralSupportTeam
Japan Japan,Europe,CentralSupportTeam
Vietnam AsiaPacific, Japan
Gulf AsiaPacific,Europe,CentralSupportTeam
AuditCollaboration IADepartment
Europe
China
Japan
AsiaPacific
Americas
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InternalAudit 16
RegionalMeetings
Learn
from
Management
Team
Sharing
BenchmarkResults
Enjoythemanagementpresentationsandparticipate
Continuouslysharebetweenregionalteams
Domaindepthcredibilitybuiltfromexperience Continuouslydevelopsselfloveslearning UtilizetheAuditWorkshopstodiscussandbenchmark
Update internal audit team members on Business results/management direction, internal audit projects and
various audit planning topics. Provide an opportunity to listen to Sony/Internal Audit managements voice andalso, have common understanding of internal audit projects/audit planning status and discuss next actions.
IADepartment
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InternalAudit 17
TeamBuildingActivities SonyFutsalCup IADepartment
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InternalAudit 18
CentralSupportTeam(CST) IADepartment
EstablishaCentral
SupportTeaminIndia:
Provideinternalauditservices,suchasdataanalytics,datamining,continuousmonitoring,etc.toallinternalauditregionaloffices.
Allowregionalinternalauditofficesgreaterflexibilitytomeetbusiness
changes.SupplytalentedandexperiencedresourcestoallIAregions.
Scaleableresources minimiseregionalinternalauditcostswhilemaintainingahighstandardofaudits.
Provideadditionalsupporttoeachregionalinternalauditoffice.
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InternalAudit 19
CentralSupportTeam Benefits IADepartment
CST
DuringAudit
PostAudit
Adhoc
PreAudit
IncreasedFlexibility
Scaleupanddown
ReducesCosts
Minimiseregionalinternalauditcostswhilemaintainingahighstandardofaudits
MoreBenchmarkingOpportunities
Overviewofissuesthatcrossborders
Sharebestpracticesamongstinternalauditoffices
RiskAssessment AuditPlanning
AuditNotice/
Requestfor
Information(RFI)
Auditorsaccessto
ERPandothersystems
AuditPrograms
AuditFieldwork
AuditWorkpapers
ITAudit
UseofCAATs
Communication
andReporting
TrackingofAudit
Issuesthatspan
geographies
ProcessofsharingLeadingPractices
EstablishedtheSonyInternalAuditCentralSupport
Team(CST)inBangalore,India.
ThecostadvantagesofutilizingIndiaOffShoremodel
areasfollows:
CultureTolerantofmisunderstandings
Patient
Cheerful
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CaseStudy:AdvertisingandPromotion
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InternalAudit 21
CaseStudy:DataAnalytics
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WhyDataAnalytics? Background DataAnalytics
IncreasedAuditCoverage
Test100%oftransactions ImprovedcompliancewithCAP
ImprovedAuditEfficiency Analyticstestssupplement
traditionalauditworksteps Audittestsfocusedonexception
analysis
QuantifiableAuditResults
Fraud
Detection Increasingthefocusonfrauddetectionandmonitoring
ProvidesabasisforContinuous
Monitoring Welldesignedanalyticscan
evolveinto
continuous
monitoring
tools
BroaderAuditCoverage Auditresultsare
basedonasignificantlylargerpopulation
thansamplebasedapproachisused
Abletodrawonmultipledatasourcesandsystems
Definearepeatableapproachforintegratinganalyticsintoacycle
Analysisofdatatoidentifyanomalies,trendsandriskindicators
Analysisbasedonlargepopulationoftransactionsinsteadofsample
Usedtosupplementorreplaceotherprocedures inspection,inquiry,observation,andreperformance
l i f
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InternalAudit 23
DataAnalytics UsageofACL
ItisessentialtodefinetheroleswithintheIA
teamDecidewhodoes
what!
Worktogether
closely..
SOURCE:
IATeamwork
DataAnalytics
Hybridapproach:ACLexpertsandnonexpertsunderstandboththetoolandauditprocess.
Sincefieldauditorsunderstandthebackgroundoftheanalysis,
theycaninvestigatepotentialissueseffectively.
D A l i I d i h ACL CMM
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DataAnalytics IntroducingtheACLCMM DataAnalytics
D t A l ti C C
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InternalAudit
Pretraining.ACLandCAATtoolsnotusedorimplemented.
Level0
Nonexistent
ACLnotusedorimplemented.
CanleverageexperiencefromotherCAATtools.Level1
Basic /Adhoc
ACLtrainingprovidedtoallteammembers.
Training/usagemethodologyexist,butarenotapplied.Level2
Applied
Expertsaresourceforregionalteams,OpsunderstandandutiliseACL.
ConsistentuseofACLriskcoverage, efficiencies.
AuditreportsandfindingsarereflectiveofACL usage.
Level3
Managed
Methodical,systematicuseofACLacrossallaudits.
Bestpracticesandtemplatessharedacrossauditteams. CAATsscripts areautomated.
Level4
Automated
Abilitytoprovidemonitoringresults.
Identifyredflagspriortoauditsoroccurrenceofissue.Level5
Monitoring
25
DataAnalytics ACLCMMand(current)RegionalPlacement DataAnalytics
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InternalAudit 26
CaseStudy:Logistics
Logistics Complexity of the Business
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Logistics ComplexityoftheBusiness Logistics
Planningand
Forecasting
Planningand
Forecasting
FinanceandTaxation
Distribution
Network
Distribution
Network
OrderProcessingOrderProcessingRepairs
ManagementRepairs
Management
ProcurementProcurementContract
Management
Contract
Management
Freight
Consolidationand
Forwarding
Freight
Consolidationand
Forwarding
Dispatch
Management
Dispatch
Management
InsuranceManagement
InsuranceManagement
SalesandMarketingSalesandMarketing
Partner
Management
Partner
ManagementBillingBilling
Inventory
Management
Inventory
ManagementReverseLogisticsReverseLogistics
QualityControlQualityControl PricingPricing
Customs HandlingCustoms Handling
HRMISandReportingITandSystems
BUSINESSUNITSBUSINESSUNITS
BusinessProcesses
GlobalIntegratedForwarding Warehousing
LandTransportation AirFreightServices
OceanServices InternationalCourier
SRPC LogisticsConsultation
CustomerServiceCustomerService
Logistics Standard Audit Program L i i
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InternalAudit 28
LogisticsStandardAuditProgram Logistics
BusinessUnit/Factory
RequestforLogistics
PickupArrangement
WarehouseManagement
TransportationDelivery,PoD
SupplierInvoice
CustomerBilling
KPI,CostEfficiency
Validatetheplanningprocess BusinessUnitrequestandLogisticsplanningcommunication
Verifythestarttoendoperationalprocessflow,andinventoryownership,PIC.
Assessvendorselectionprocess, assessshipment,warehouse,customsupplierperformance
Validateandreperform planning,routing,cargoselection,loading/unloading,custom
Reviewwarehouseselection,contractrenewal,pricing,insurance
ReviewandrecalculatewarehousecostandbillingtoBusinessUnit storage,damage,
package,OT,utility
ValidatePayment/cost Warehouse/trucktracking,invoicereconciliation,reviewsampleinvoice
ValidateBilling/revenue Scheduling,storage,custom,PoD,handlingfee,sampleinvoice
Scheduling,planningbetweenbusinessunit/factory1
Dispatchmanagement Transportationpickup,delivery2
KPI,performancemeasurement,costefficiency5
Financials Tracking,billing,payment,andP&Lreporting4
Warehousemanagement Load/Unload,dailymaintenance3
ProcessandAssessmentArea KeyAuditProgram
Review,reperformKPIdetails,benchmarkwithGlobalfinishedgoodsKPI,documentation
Assesscurrentmanagementreview,involvementinoperations,driversforcostefficiency
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InternalAudit 29
CaseStudy:BPO
BPO Background BPO
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BPO Background BPO
RISK SCOPE ServiceLevel Efficiency Compliance Information
ProcessEfficiency/Effectiveness
ContractCompliance
VendorPerformance/Monitoring
VendorEducation/Compliance
VendorControl/ProcessVisibility
BillingfromVendor/Cost
SoD /SystemAccessRight
InformationSecurity
BusinessContinuityPlanning
KEY POINT : AUDIT AGAINST CONTRACT.
Two Phases
1. Contract Design: Are key risks covered?
2. Contract Execution: Is it working as designed? Are we monitoring?
Audit Scope:
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InternalAudit
SONY or make.believe is a registered trademark and/or trademark of Sony Corporation.Names of Sony products and services are the registered trademarks and/or trademarks of Sony Corporation or its Group companies.
Other company names and product names are the registered trademarks and/or trademarks of the respective companies.
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