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Internal Control Failings - Could it happen to you?

With your hand on your heart, if your regulatory or licensing body were to ask you today for exactly who conducted a specific step in relation to a specific client on-boarding which took place two years ago - would the responsible person within your organization have that information to hand ?
Many would not, and this can bring significant risks to your business. As an example, Manulife Asset Management were accused of not maintaining proper customer risk profiling records, and as a result were fined US$ 3.10 million by the HK SFC in March 2013. The major reason cited for the fine was that they “failed to implement proper processes to comply with this most basic obligation for intermediaries.” [1]
To help prevent such internal control failures, companies can adopt workflows. Well-designed workflows are essential for the smooth and efficient operation of an organization, and offer a number of key benefits. Workflows essentially help by formalizing the various business processes but also provide several additional key benefits. Here we examine 6 key benefits to an Advisory firm.
1] Consistency: One traditional benefit of automated workflows is that it enables a complex organization to ensure that the same process is followed across various departments, offices and jurisdictions. For smaller organizations the ability to ensure that all similar cases are handled in exactly the same manner means that management should spend less time dealing with erroneous cases.
2] Audit trail: One benefit which is starting to be appreciated much more is the audit log maintained by automated workflows. In today’s world of tightening regulatory frameworks, maintaining a robust audit trail, and being able to supply this quickly and easily when requested, demonstrates control over ones business.
3] Efficiency: Designing and implementing workflows forces one to look at the overall process in a structured manner. This can lead to identifying steps which are no longer required or which could be routed more effectively within the organization. By making existing processes more efficient, workflows help the organization save time on an ongoing basis.
4] Visibility: Management can retain an overview of where workflow processes are at, through an overview screen. For example, management can see at what stage in the application process each piece of new business is at. Blockages can quickly be identified and dealt with.
5] Training: Implementing workflows means that new joiners can quickly get up to speed with the job required, and means that a team’s function is stabilized and the knowledge of the process remains within the organization even if key members should leave.
6] Flexibility: If a change in a process is required, perhaps due to additional requirements from a provider or changes in regulations, it is quick and easy to implement new workflow steps which are then consistently followed. Equally workflows allow for additional value-added services to be added.
Although there is an initial cost involved with implementing workflows in the business process, both in terms of time and effort - the rewards are ongoing and increase exponentially with the size of your business.
Privé Managers offers an integrated business process management (bpm) module which allows our clients to set-up automated workflows, using the industry standard Business Process Model and Notation (BPMN) 2.0, interfacing with any other aspects of the system - such as valuations and client onboarding.
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[1]http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=13PR13
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