Large companies can benefit from a regular re-evaluation of their financial controls and it's better for the corporate treasury to ensure this is carried out before audit arrives.

Writing in Treasury&Risk, financial controls expert John Wengler, notes that large companies can benefit from a regular re-evaluation of their financial controls.

In particular they should ask themselves why each control is carried out, how it helps them manage their risks and which individual is responsible for that control. It can't be taken for granted, just because financial controls are in place, that they are actually efficient and effective at protecting the company from financial risks, or that they align with the company's operational objectives.

The individuals responsible for financial controls also need to be aware of their responsibility and need to carry out the tasks in a transparent way, so that a colleague or new member of staff could take over at any time, should the need arise.

Controls are meant to detect and pick up on problems within the company's operations. No company is completely free of discrepancies, so if controls tests don't show up some problem areas, companies should be wondering why. John Wengler says about 20 per cent of controls testing should show up some orange or red light 'failures'. In his article, Wengler writes:

“The words “controls failure” strike fear into the heart of any corporate treasurer dealing with an external auditor. That is why controls testing should be done for the sake of management well before the annual external audit occurs. I have no problem with a finance team achieving all green lights on its controls testing after the team has rigorously tested the controls framework and then fixed any issues that arose. External auditors should only validate what internal staff has already perfected.”

His article also suggests the following five ways to re-evaluate your company's controls processes.

1. Do your company's financial controls correspond to your risk management priorities?
2. Which member of staff is responsible for each control?
3. What percentage of your controls pass testing?
4. Financial controls should appear in all aspects of personnel management, including job descriptions, job interview questions and personal goals.
5. Can any member of staff perform another individual's tasks? If not, the design and documentation of processes should be improved.