How to Keep Your Output Controls Current, Effective

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					 ERM & Internal Controls




How to Keep Your Output Controls Current, Effective
Assessing your output                           Y2K remediation could have been avoid-           such as financial output controls, operations
                                                ed, had businesses incorporated a regular        output controls, administrative output con-
controls at the start can                       output controls assessment protocol.             trols, or maintenance output controls where
prevent a data meltdown                             Was Y2K a waste of money, or a prudent
                                                investment to ensure the smooth transition
                                                                                                 one system relies on the accuracy of another
                                                                                                 system to process data or complete transac-
at end; lessons of Y2K                          the world experienced? The answer to that
                                                question is beyond the analysis of this ar-
                                                                                                 tional processing. Segregating these controls
                                                                                                 allows you to prioritize and easily manage
                                                ticle. However, to prevent your own mini         the cycle of your review of these controls.
By James Bone                                   Y2K scare, now and in the future, it is criti-       If we fail to remember that one simple
Compliance Week Columnist                       cal to incorporate an annual periodic review     change in one application can have serious
                                                of output controls into your toolkit of in-      implications downstream in other applica-

T    echnology has become ubiquitous in
     the processing of millions of business
transactions. Computer programs and ana-
                                                ternal controls over financial reporting and
                                                operations.
                                                                                                 tions, we begin to build our own Y2K event
                                                                                                 down the road.
                                                                                                     If you conduct annual SysTrust or SAS 70
lytical software have contributed to major                                                       audits, some of these controls will be tested
increases in productivity, consistency, and                                                      as part of the independent exams performed
accuracy of today’s work product. Output                                                         by external auditors. External auditors in-
controls ensure that computer programs                                                           creasingly rely on systems controls for as-
process these transactions accurately and
                                                           If we fail to remember                surance that financial controls are operating
produce the results we expect to see. But                 that one change in one                 effectively. However, companies should not
what happens when things go wrong or                         application can have                rely solely on these examinations to assure
undetected for long periods of time? We                                                          themselves that all of their critical output
place tremendous faith in the accurate op-           serious implications in other               controls are covered.
eration of these varied output controls. So             applications, we begin to                    Once you have identified the scope of
what happens when system controls them-                                                          your review, assemble a small team of sub-
selves are inadvertently changed without                 build our own Y2K event                 ject matter experts to begin the assessment
the proper authorization, testing, or veri-                        down the road.                process. Start with a simple assessment map
fication?                                                                                        of the controls: input, activity, output. Your
    System output controls are primarily au-                                                     SMEs should be able to determine who is ac-
tomated controls but may include manual                                                          countable for the control, how the control is
controls as well. Examples include controls     Opportunities and Challenges                     supposed to work, how to validate or test its
that ensure holiday calendars accurately re-
flect current or future dates, proxy tabula-
tions are cross-referenced with share counts
                                                T    he good news is that performing a
                                                     review of output controls is not an
                                                expensive or labor-intensive exercise. A
                                                                                    
				
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