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following questions which will help
◗ Where are we vulnerable?
◗ What information do we need to
◗ How could someone disrupt our
◗ On what information do we most rely?
◗ What activities are most complex?
◗ What is our greatest legal exposure?
Below are some types of exposures
that may pose higher risks for factoring
◗ Can the user edit or delete verification and collection notes?
◗ Does the system allow for posting to
a prior month?
◗ Does the password security meet
some of the requirements of
◗ Are the users set up with proper
authority to add, change or delete
◗ Does the system generate a security
log report to track user’s usage?
◗ Does the system track Notification
◗ Does the system monitor or provide a
reminder system for external requirements such as UCC filing, financial
statements and tax returns?
◗ Does the system generate an audit
log file to track add/changes/dele-tion to invoices, schedules, advances,
collections, credit limit and fee & rate
It is important that risk identification
be comprehensive, at the activity or process level, for operations and financial
been verified and validated to prevent
and detect the risk exposures.
A key point is to ensure that the financial software has the ability to control
the implementation and subsequent
changes of information. The software
also have to provide a change control
mechanism which indicates that management is controlling the changes and
adds validity to the system, a key item to
look for on the internal controls audit.
While internal audit control is a
process, its effectiveness occurs when
it assess the condition of the policy and
procedure within the company. Management’s role in the internal audit control
procedures is critical to its effectiveness.
The use of spot checks of the information can provide a reasonable level of
confidence that the controls are functioning as intended.
Risk is the probability that an event or
action will adversely expose your organization to fraud. If you don’t have an internal audit control procedure in place,
you are increasing the chances that
your organization will be unnecessarily
exposed. But with a few relatively simple
steps, internal audit control procedures
can be developed to decrease your risk
exposure to a reasonable level.
One of the key requirements for fraud
to occur is opportunity. Opportunity can
take many forms within an organization
where fraud can be perpetrated, such as
weaknesses in internal controls, necessities of the operating environment, management styles and corporate culture.
The good news is that opportunity is the
easiest and most effective requirement
to address that will reduce the probability of fraud. By developing effective
systems of internal controls, you can
remove opportunities to commit fraud
externally and internally.
For More Information
Factor/SQL has the ability to implement
the necessary internal audit controls
based on the factoring company’s
requirements and procedures. Over
the past 29 year years we have worked
closely with Factors to develop features
for Audit Trail, Security and User Access.
In addition, we have implemented
features in user security to be in compliance with ‘SOX’. For more information
about how we can help reduce your risk,
contact us at:
3i Infotech Financial Software Inc.