ICOFR

Broad Case Study & Related Facts

Preliminary facts of the case

• The Client was engaged in the gas and electric service to approximately 2 million customers.
• A large public energy company with $6 billion in revenue and multiple subsidiaries was required to document and implement internal controls throughout the company and at various locations for Sarbanes Oxley (SOX) requirements

Evaluation

• We provided SOX project management for the two largest divisions of the Company. We assisted in the execution of all aspects of a detailed SOX implementation project plan including below mentioned services.

Treatment

• Client discussion for initial understanding of Company process & flows
• Obtain and analyze the relevant data for the selected 2 divisions of the company
• Data Analytics on the provided data to uncover potential red flags or exceptions
• Sample selections & Controls Review
• Documentation Review
• Reporting,  Remedial Planning & Implementation

Risk Exposures and Key Takeaways

Risk Exposures:

• Processing of unapproved transaction can lead to financial loss to the company.
• Entering into agreement / contract with the related party vendor having different business interest.
• Unauthorized access to the confidential information of the Business.
• Exceptional payments can be done in violation of the Delegation of Authority (“DOA”)

Key Takeaways

• It was found that controls were not drafted in a way to cover all the critical aspects of Business Process transactions
• Proper documentation/ supporting was not maintained for the defined controls.
• Appropriate approvals were missing on the documents i.e. contracts, vouchers, agreements