• Understanding where the weakness were in the BUs by going through the work process.
• Involvement of the employees at the lower level in the control process.
• Early testing to verify controls.
The top-down approach is a hierarchical framework and a macroeconomic, which top management use their knowledge, experience, and judgment to identify the areas that present material weaknesses. Top management then develop a plan to reduce these risks. Lower level employees are not involved in this process. The advantage of this type of approach is: looking at the big picture and planning out the solution. This approach could save money and time if top management have a lot of knowledge about how the company departments functions to create proper controls. However, if they miscalculate the controls,...
... middle of paper ...
• Perform gap-analysis for controls, remediate the gaps by educating the control owners.
• Develop a plan to correct each control gap
• Monitor and test the controls.
One of the most useful testing process that Trinity perform to validate its accounting system was correcting the material weakness of documentation controls. To have a process of management signature on inventory controls, reconciliations of various accounts, and monthly/quarterly financial statements. This process confirmed that controls were performed and the financial statement are correct and free of errors.
Trinity journey to pass the SOX compliance has been a long and expensive road. Trinity spend $2.5 million in 2004, $1.3 million in 2005, $1.2 Million in 2006, and $1.0 million in 2007. Between 2004 and 2007, Trinity control tested have decreased from 2440 to 505, internal testing
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