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Perspectives
Revamping a new controls program for the future
A modern recipe for success
During this time of digital and finance transformation, it is a good time to think about ways to optimize a controls program for the future. Building on the modern framework for controls, there are additional strategies and considerations when optimizing a controls program. This is a new controls recipe for success.
December 12, 2023
A blog post by Beth Kaplan, Katie Glynn, and Stu Rubin
During a time of digital and finance transformation, many controls programs continue to have limitations. The absence of innovation may have some assurance functions struggling to keep pace in a quickly changing environment. Without a more strategic framework, an organization’s controls may continue to lag behind overall finance transformation. Now is the time to think through a more purposeful design. While we have previously explored a modern framework for controls, there are additional strategies and considerations when optimizing a controls program. This is a new controls recipe for success.
The new controls program for the future
The program is broken down into three main components to understand a controls recipe for designing a new program for the future. These are the most essential pillars of a modern program—the framework, the technology, and the operating model.
Three primary enterprise service delivery goals
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Framework
The first component is restructuring the controls framework to a risk-based structure that aligns with the organization’s risk appetite. Additionally, the framework should also align with business performance and strategy rather than just financial reporting. It’s about environmental, social, and governance controls. It’s about operational controls. It’s about financial reporting risk and controls.
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Technology
The second pillar of an optimized controls program is technology. Specifically, it’s about establishing a controls technology ecosystem. Even more specifically, it’s about automation—automating the operation of controls, automating the monitoring of controls, and automating the testing of controls. While many organizations have made significant investments in digital platforms, leveraging these investments to create this technology ecosystem can help drive innovation with automation.
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Operating model
The third and likely most important pillar of the controls program for the future is the design of a next-generation controls operating model. This is where organizations embed controls in the day-to-day business. This isn’t just about capability or technology but all aspects of an organization.
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Key ingredients in a recipe for success
Additional ingredients that make up a modern controls program for the future include components that have an impact on the three pillars of the program and optimization considerations for revamping or implementing a new controls program.
Support is a crucial ingredient for a modern controls program that continues to optimize itself beyond implementation. Aside from providing targeted support, this includes monitoring and measuring performance and leveraging data to implement an ongoing support structure that promotes performance champions.
A critical ingredient for success is setting up the program to succeed from the starting line. Establish and communicate a clear tone at the top and from the beginning. Embed the program with another tactical or transformation project to help guide the trajectory. Finally, provide guidance and reward success stories right out of the gate.
The journey to a new controls program must start somewhere. So start small and use initial wins, no matter how minor, to generate some velocity toward more substantial successes. There may be many iterations, but a strong program should be nimble. Things will happen midstream, and flexible programs can help you pivot.
Benefits of optimizing the controls program
While this recipe for a new controls program may provide an organization with benefits beyond risk and controls, many organizations have seen some notable benefits with an optimized design that focuses on the framework, technology, and operating model pillars.
- Cost of controls: Some organizations have noted a cost of controls reduced by more than 30%.
- Automation tools: Organizations can achieve enhanced controls automation. Some have highlighted more than 70% automation in certain key business process areas.
- Performance: Enhance resilience and reputation, hitting key performance indicators and receiving high Net Promoter Score marks.
- Efficiency: Improve operational efficiency across the organization.
- Risk mitigation: The enhanced controls environment can help mitigate critical risks for the organization.
- Purpose: Establish a more enabled purpose with a controls culture, ownership, and accountability.
To hear more of our discussion about a modern controls program recipe for success, listen to our Dbriefs webcast Time for a revamp: Designing a framework for the future of controls.
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