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Internal Controls in core operational processes

As estimated by ACFE (The Association of Certified Fraud Examiners), organizations worldwide lose around 5% of their annual revenues to fraud. ACFE reports that the lack of effective internal controls is the primary contributing factor in nearly a third of all fraud cases.

In the light of global market developments, companies reach out to Deloitte for inspiration on how to turn first and second line controls into measurable value drivers for their core operational business processes:

“How can we continue our progressive controls journey, while proving to our organization that we deliver measurable savings?”

“Which technological levers should be applied to deliver increased controls effectiveness, while identifying quick savings and using only limited resources?”

In current market conditions, control transformations will be scrutinized for immediate and measurable value adds as well as business criticality.Therefore, we utilize and mobilize our global Deloitte community to deliver immediate and measurable impact for our client and support their trajectory towards digitalized automation, improved controls and efficient core business operations.Below, we present several opportunities that are aimed at delivering measurable efficiencies and financial impact through an optimized internal controls system. These practices are extracted from multiple successful deliveries in SAP environments and all are based on analytics methodologies.We will continue expanding the list of inspirational practices, but included below are examples of some of the lowest hanging fruits:Spare Part Optimization: Companies have found great opportunities in optimizing spare part levels based on ERP integrations that enable analyticsInventory Monitoring: Manufacturing entities have found great opportunities in optimizing their inventory coverage yielding high saving opportunitiesInventory Compliance: Operations with effective and automated monitoring of inventory shelf-life compliance can enable 1% – 2% inventory savingsPurchasing Yield: Applying an algorithmic approach to purchasing gives insights into the opportunities between standard and actual SKU-level cost.In each of the cases, we would not only evaluate the potential savings, but create controls and visualization tools to ensure that our clients realize these opportunities.

A typical delivery process for each module would include three phases:

1. Validate: This process focuses on stakeholder engagement, identifying and mapping risks and controls with business controls operations and SAP system functionality’2. Pilot: Based on the validation phase, we will take up 1-2 SAP/ System connections (entities) and deploy our analytic and algorithmic protocols. We will then validate results with stakeholders and visualize the KPIs for each module3. Scale: Based on the success of the Pilot phase, we will start scaling the project to other entities based on a defined priority.We have a repository with the required SAP tables, algorithms, KPIs and visualization, making our solutions plug’n’play with only limited configurations. This will bring a high degree of flexibility for the client, making it possible to adapt quickly and exploit future possibilities.

 

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