Risk Management

1
Risk Management External Influences
Piya Sen Manager, Special Projects (Financial
Services) June 20, 2006 CAUBO Annual Conference
2006
2
Relevant Legislation North America

• Evaluation of internal control over financial
  reporting (ICOFR)
• Management certifications
• Listing requirements related to corporate
  governance

Why is this relevant to us?
3

• Evaluation of ICOFR
• US - SOX 404 Canada - MI 52-111 (withdrawn)
• Requires
• Annual evaluation by management of ICOFR
  (against suitable framework)
• Maintain sufficient evidence to support
  evaluation
• Public reporting of material weaknesses
• Audit by external auditors (US only)

4

• Management Certifications
• US - SOX 302 Canada - MI 52-109
• Requires senior management to certify that
• Annual and quarterly filings contain no
  misrepresentations
• Annual and quarterly filings fairly present
  financial condition, results and cash flows
• contd

5

• Management Certifications (contd)
• Requires senior management to certify that
  they (contd)
• Have designed disclosure controls and ICOFR
• Have evaluated disclosure controls and disclosed
  conclusions
• Have disclosed certain changes in ICOFR
• Have evaluated ICOFR and disclosed conclusions
  (Canada only)

6
Lessons Learned

• People in management roles have implicit
  responsibility to manage certain risks
• Forced compliance can be very costly
• Voluntary compliance allows organizations to pick
  and choose optimize cost/benefit

7
COSO1 Internal Control Framework
1 The Committee of Sponsoring Organizations of
the Treadway Commission (1985)
8
Case Study Sample Project

• Assess control environment
• Select representative cross-campus participants
• Vote on statements related to control environment
  (anonymous)
• Assess results and determine improvement
  opportunities
• Prioritize and implement changes
• contd

9
Case Study Sample Project (contd)

• Assess control activities
• Analyze key balance sheet/income statement items
• Inventory control activities and control gaps
• Assess results and determine improvement
  opportunities
• Prioritize and implement changes
• Related initiative
• Job profiles for senior management positions

10
Critical Success Factors

• Clear project description and objectives
• Executive leadership
• Commitment of appropriate resources, including
  project management resources
• Communication with campus community
• Implementation and training support for campus
  community