BUSINESS CONTROL & YOU --BUSINESS CONTROL & YOU --THE CFO PERSPECTIVETHE CFO PERSPECTIVE

BUSINESS CONTROL & YOU --BUSINESS CONTROL & YOU --THE CFO PERSPECTIVETHE CFO PERSPECTIVE

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OUTCOMES FOR YOUOUTCOMES FOR YOU

• Take Business Process Control Basics and Establish a CFO Perspective

• Leave with Helpful Tools

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WHAT IS BUSINESS CONTROL?WHAT IS BUSINESS CONTROL?

Accounting Verifications

Security and Locks

Internal and External Audit

Checklists

SignaturesAny action taken by management to enhance the

likelihood that company objectives and goals will be

achieved on a sustained basis

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ELEMENTS OF BUSINESS CONTROLELEMENTS OF BUSINESS CONTROL

Risk ManagementRisk Management

Corporate CultureCorporate Culture

Processes and Processes and SystemsSystems MonitoringMonitoring

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DRIVING FLAWLESS EXECUTIONDRIVING FLAWLESS EXECUTION

Business control drives achievement of goals!

CORPORATE CULTURE

RISK MANAGEMENT

PROCESSES & SYSTEMS

MONITORING

Management

ACHIEVEMENT OF COMPANYGOALS &

OBJECTIVES

Employees

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WHERE DO YOU FOCUS?WHERE DO YOU FOCUS?

Tax Compliance

DisasterRecovery

Accounts Payable

AccountsReceivable

AR Collections

SalesRecognition

Facilities Security

ContractManagement

EnvironmentalCompliance

SafetyEngineering

Health &Safety

Fixed Assets Credit Financing

Inventory

Purchasing

Variable Marketing

Fixed Marketing

Warranty

Customs

Payroll & Timekeeping

SupplierManagement

Treasury

Cash Management

Journal EntriesReconciliation

ProductDevelopment

Insurance

Vehicle Remarketing

System Security

Distribution & Logistics

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CFO ‘TOP SIX’CFO ‘TOP SIX’

• Governance and Ethics• Cash and Treasury• Asset Integrity• Revenue• Purchasing and Payables• Accounting

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GOVERNANCE AND ETHICSGOVERNANCE AND ETHICS

Establishing a decision framework for doing the right thing

CONTROLSAudit Committee

Clear Organizational StructureFormal Delegations of Authority

Policy LettersInvolvement of OGC

Procedures for Reporting Unusual Events1-800-847-7911

POTENTIAL RISKS• GOVERNANCE

- Business Mismanagement- Confusion & Inefficiency

• ETHICS- Loss of Reputation- Litigation Issues- Asset Loss

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CASH AND TREASURYCASH AND TREASURY

Protection and maximum utilization of cash and investment assets

CONTROLSAppropriate Cash Handling

Delegations of AuthorityAccount Reconciliation

Hedging & Risk Transfer Tools• • •

Use of Treasury & Risk Management Expertise

POTENTIAL RISKS• POOR CASH MANAGEMENT

Theft or Loss of Cash Loss of Interest Income

• POOR RISK MANAGEMENT Currency, Interest Rate, &

Commodity Exposure Liquidity Risk Property & Casualty

Hazards Default Risk

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ASSET INTEGRITYASSET INTEGRITY

Protection and usability of Company physical and information assets

CONTROLSPhysical Security

Tagging & Cycle CountsReceiving/Shipping Processes

Application Control ReviewDisaster Recovery Plan

PasswordsUser Access Review

POTENTIAL RISKS• PHYSICAL ASSETS

- Loss, Theft, or Damage- Waste & Underutilization

• INFORMATION ASSETS- Loss, Theft, or Damage- System / Business Failure

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REVENUEREVENUE

Timely recognition of sales revenue and collection of receivables

CONTROLSSeparation of Revenue

Recognition & Cash HandlingProcedures for Revenue

RecognitionAging Follow-up

Bad Debt Allowance AnalysisAccount Reconciliation

POTENTIAL RISKS• Revenue Over/Understated• Overdue Receivables• Ineffective Collection Process • Bad Debt Exposure

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PURCHASING AND PAYABLESPURCHASING AND PAYABLES

Purchasing high quality goods and services and paying the right amount at the right time

CONTROLSUse Purchasing Expertise

Budget ManagementSupplier Database / Preferred

Supplier ListingLow Value Purchase ReviewStandard Terms & Conditions

Receipt VerificationPre-Payment Review

Account Reconciliation

POTENTIAL RISKS• PURCHASING

Unnecessary Purchase Price too High Quality Not to Specification Contracts that Don’t Support

Goals• PAYABLES

Pay Wrong Amount Pay for Goods not Received Pay Wrong Time

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ACCOUNTINGACCOUNTING

Ensuring that accounting records are accurate and managed properly

CONTROLSAccount Reconciliation

Reconciling Item Follow-upJournal Entry Review &

Approval

Up-to-Date Chart of AccountsClosing Procedures

Budgeting & Analysis

POTENTIAL RISKS• ACCOUNTS MISSTATED

- Improper Entry Made- Legal Exposure to

Shareholders / Regulatory

• DATA NOT USEFUL- Poor Categorization- Non-Timely

• DATA NOT USED

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EXERCISE:SPECIAL METAL STAMPERS, INC.

EXERCISE:SPECIAL METAL STAMPERS, INC.

Method: Individual Exercise

Objective: Use the CFO Top Six to sift through information and find critical control concerns

Time: 15 minutes

Instructions: You are Robin James, and today you are taking over from John Smith as Controller at Special Metal Stampers, Inc. a wholly owned subsidiary of We Build Cars. As you sit down at your desk, you notice a full in-basket requiring your attention. Review the narrative provided (a summarization of several introductory interviews) and the contents of your in-box. Which three concerns would you tackle first, and why?

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BUSINESS CONTROL TOOLSBUSINESS CONTROL TOOLS

• Internal Control Coordinators

• Modular Control Review Programs

• 6-Sigma• The GAO

Now that you know where to focus, what tools can you use to find and address concerns?

• Corporate Policies and Standards

• Application Control Review (ACR)

• Training

FORD PROPRIETARY

CORPORATE POLICIES AND STANDARDS

CORPORATE POLICIES AND STANDARDS

Finance Manual(www.dearborn.ford.com/fm/)

Policy Letters(www.ctis.ford.com/policydirect/)

Global Information Standards(http://www.dearborn4.ford.com/gim/gis/index.htm)

Corporate Systems Manual(http://www.dearborn.ford.com/security/policy/csm/)

Requirements and Guidelines Established by Operations

Other guidelines are available on the process owners’ sites

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APPLICATION CONTROL REVIEW (ACR)APPLICATION CONTROL REVIEW (ACR)

Review and approval process for system development

The ACR process requires the business owner of a new or

fundamentally changed system to certify

controls are in place before system launch. The process

includes a checklist of controls and discussions with GAO on

a preventive basis

Essential for guarding information assets

ACR Homepage(www.dearborn.ford.com/eis/552/)

FORD PROPRIETARY

TRAININGTRAINING

Additional training resources for you and your organization

Corporate Training• Courses with control emphasis including: Global 8D (Root

Cause Analysis), and Statistical Process Control• Local training through XXXX (To be filled in prior to

course)

Business Process Control Training• A comprehensive set of training courses on specific

functional areas from the GAO• For more information visit our web-site reference at:

www.finance.ford.com/gao/sites/Training/BPC-training.htm

FORD PROPRIETARY

INTERNAL CONTROL COORDINATORS

INTERNAL CONTROL COORDINATORS

Co-located (within automotive groups) subject matter experts in control with business perspective

• Local support for everyday operational control questions• Assist Management and Operations Proactively in:

- Identifying process improvement opportunities- Developing and implementing solutions

• Resource for Modular Control Review Process, a self-assessment of controls (see following slide)

http://www.dearborn.ford.com/fm/intcntrl/icntgd89/icgprc89/8960/896020.htmlInternal Control Coordinator Roles & Responsibilities (FM 80-60-20)

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MODULAR CONTROL REVIEW PROGRAMS

MODULAR CONTROL REVIEW PROGRAMS

Helps you identify areas of concern on a progression basis (based on risk)

Should be used at least annually to ensure that operations are under control

Process based control checklists for operational review

Modular Control Review Program (FM 89-60-10)http://www.dearborn.ford.com/fm/intcntrl/icntgd89/icgprc89/8960/896010.html

http://www.finance.ford.com/gao/programs/busprogs.htmModular Control Review Programs

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6-SIGMA6-SIGMA

Application of 6-Sigma Principles to Business Process Controls

Principles of 6-Sigma are based in Control

• • •Planning, measuring and

monitoring are critical components

• • •Emphasize the 6-Sigma Mindset

6-Sigma Web-sitewww.6-sigma.ford.com

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THE GAOTHE GAO

Additional resources dedicated to improving your business

Use reviews as a catalyst to create a control mindset within the operating team

• • •Jointly identify risks and opportunities to focus efforts

on high reward areas

The GAO Website (www.finance.ford.com/gao/)

FORD PROPRIETARY

CHECKPOINT: CAN YOU…CHECKPOINT: CAN YOU…

1. Move Beyond the Business Process Control Basics to Establish a CFO Perspective

2. Go to Other Resources to Get More Information

BUSINESS CONTROL & YOU --BUSINESS CONTROL & YOU --THE CFO PERSPECTIVETHE CFO PERSPECTIVE

BUSINESS CONTROL & YOU --BUSINESS CONTROL & YOU --THE CFO PERSPECTIVETHE CFO PERSPECTIVE