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New Demands on Compliance and Controls for Quality Assurance

Division Career Tips, Company Culture, Executive Leadership, IT, Light Industrial Division, Professional Division, Real Estate Division
June 17, 2017

Quality Assurance: A Necessary Ingredient for Internal Control

Management’s ability to fulfill its financial reporting responsibilities often depends on the design and effectiveness of the processes and safeguards it has put in place over accounting. While no control system can absolutely assure that financial reports will never contain material errors or misstatements, companies must discuss how a quality assurance process can substantially reduce the risk of inaccuracies and can lead to an effective system of internal control over financial reporting.

An increased focus on the adequacy of internal control systems by a wide variety of regulators is causing organizations to take a more systematic, risk-focused approach to managing their compliance efforts. A well-designed quality assurance program supports the process by which accounting judgments and estimates are made, and in turn the reliability of the financial reports. Considering the new standards on revenue recognition and lease accounting, it will become even more important for companies to have a robust system of controls. Most companies tend to have their upstream processes such as AP, AR, and fixed assets, covered, but it’s the downstream processes such as financial statements, footnotes, and MD&A that are often questioned.

Below are general best practices to discuss internally when executing this strategy:

QA Key Points:

Also, it’s worth mentioning that QA processes are needed at various levels of an organization, and if a company does not have resources, they should outsource competent QA resources. A good independent set of eyes can make all the difference with success in this endeavor.