Internal Control Consulting
At Yusei, we provide step-by-step coaching for our clients in the necessary tasks of structuring and assessing internal control according to the WBS(*1).
J-SOX, an internal control audit system for financial reporting has been in effect since the beginning of the fiscal year starting on or after April 1, 2008. J-SOX requires companies to be transparent in the structuring and operation of control activities and to prepare documentation detailing their accounting standards, operating processes and process risk. At Yusei we have developed WBS as a method for establishing and assessing appropriate internal controls and we have incorporated WBS as an integral component of our detailed assessment and consulting.
(*1) WBS = Work Breakdown Structure |
WBS for establishment and assessment of internal control
WBS is a system where operational process tasks are broken down into minimal operational units for which a project team or internal audit department establishes and assesses internal control. Details of the work content and outcomes are set out in assessment checklists, analysis sheets, and worksheets which we prepare, and the quality target for each task is stated. These tools can be used even by non-specialists. |
Basics for internal control
Our basic approaches to internal control consulting are explained below. These approaches are based on knowledge our firm has accumulated through internal control consulting. We believe that quality in services for designing and assessing internal control does not come from an in-depth understanding of complex methodology but from thinking in depth. |
(1)Risk approach
- Not all controls are required for all processes. Key controls are determined on the basis of the risk assessment, and it is important that these are put in place and that they operate without fail.
- Documentation is the method utilized for this process but it is not the goal itself.
(2)Current approach
- No companies today operate without controls over their work processes. It is important to respect current work practices in a company and make appropriate adjustments to rectify any deficiencies in the current controls.
(3)Work processes and controls are one and the same.
- Controls are built into work processes. If controls are to be improved, work processes must also be improved simultaneously when problems exist in the work procedures or methods.
- This same can be said when manual controls are to be automated.
(4)Internal audit committee
- To introduce a function for assessing internal control within a company on a regular, ongoing basis, establishing an internal audit committee is desirable. We provide our clients with assistance in setting up internal audit committees and mentor them through the early stages until their committees are fully familiar with their roles.
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Summary of evaluation and audit of internal control over financial reporting