How COBIT helps you achieve SOX Compliance

First released way back in 1996, COBIT has already been around for quite a while. One reason why it never took off was because companies were never compelled to use it ? until now. Today, many CEOs and CIOs are finding it to be a vital tool for achieving SOX compliance in IT.

Thanks to SOX, COBIT (Control Objectives for Information and related Technology) is now one of the most widely accepted source of guidance among companies who have IT integrated with their accounting/financial systems. It has also gained general acceptability with third parties and regulators. But how did this happen?

Role of control frameworks in SOX compliance

You see, the Sarbanes-Oxley Act, despite having clearly manifested the urgency of establishing effective internal controls, does not provide a road map for you to follow nor does it specify a yardstick to help you determine whether an acceptable mileage in the right direction has already been achieved.

In other words, if you were a CIO and you wanted to find guidance on what steps you had to take to achieve compliance, you wouldn’t be able to find the answers in the legislation itself.

That can be a big problem. Two of your main SOX compliance obligations as a CEO or CIO is to assume responsibility in establishing internal controls over financial reporting and to certify their effectiveness. After that, the external auditors are supposed to attest to your assertions. Obviously, there has to be a well-defined basis before you can make such assertions and auditors can attest to anything.

In the language of auditors, this ?well-defined basis? is known as a control framework. Simply put, once you certify the presence of adequate internal controls in your organisation, the external auditor will ask, ?What control framework did you use??

Knowing what control framework you employed will help external auditors determine how to proceed with their evaluations and tests. For your part, a control framework can serve as a guide to help you work towards specific objectives for achieving compliance. Both of you can use it as a common reference point before drawing any conclusions regarding your controls.

But there are many control frameworks out there. What should you use?

How SOX, COSO, and COBIT fit together

Fortunately, despite SOX?s silence regarding control frameworks, you aren’t left entirely to your own devices. You could actually take a hint from the SEC and PCAOB, two of the lead organisations responsible for implementing SOX. SEC and PCAOB point to the adoption of any widely accepted control framework.

In this regard, they both highly endorse COSO, a well-established internal control framework formulated by the Committee of Sponsoring Organisations of the Treadway Commission (COSO). Now, I must tell you, if you’re looking specifically for instructions pertaining to IT controls, you won’t find those in COSO either.

Although COSO is the most established control framework for enterprise governance and risk management you’ll ever find (and in fact, it’s what we recommend for your general accounting processes), it lacks many IT-related details. What is therefore needed for your IT processes is a framework that, in addition to being highly aligned with COSO, also provides more detailed considerations for IT.

This is where COBIT fits the bill.

How COBIT can contribute to your regulatory compliance endeavors

COBIT builds upon and adheres with COSO while providing a finer grain of detail focused on IT. You can even find a mapping between COBIT IT processes and COSO components within the COBIT document itself.

Designed with regulatory compliance in mind, COBIT lays down a clear path for developing policies and good practice for IT control, thus enabling you to bridge the gap between control requirements, technical issues, and business risks.

Some of the components you’ll find in COBIT include:

IT control objectives

These are statements defining specific desired results that, as a whole, characterise a well-managed IT process. They come in two forms for each COBIT-defined IT process: a high-level control objective and a number of detailed control objectives. These objectives will enable you to have a sense of direction by telling you exactly what you need to aim for.

Maturity models

These are used as benchmarks that give you a relative measurement stating where your level of management or control over an IT process or high-level control objective stands. It serves as a basis for setting as-is and to-be positions and enables support for gap analysis, which determines what needs to be done to achieve a chosen level. Basically, if a control objective points you to a direction, then its corresponding maturity model tells you how far in that direction you’ve gone.

RACI charts

These charts tell you who (e.g. CEO, CFO, Head of Operations, Head of IT Administration) should be Responsible, Accountable, Consulted, and Informed for each activity.

Goals and Metrics

These are sets of goals along with the corresponding metrics that allow you to measure against those goals. Goals and metrics are defined in three levels: IT goals and metrics, which define what business expects from IT; process goals and metrics, which define what the IT process should deliver to support It’s objectives; and activity goals and metrics, which measure how well the process is performing.

In addition to those, you’ll also find mappings of each process to the information criteria involved, IT resources that need to be leveraged, and the governance focus areas that are affected.

Everything is presented in a logical and manageable structure, so that you can easily draw connections between IT processes and business goals, which will in turn help you decide what appropriate governance and control is needed. Ultimately, COBIT can equip you with the right tools to maintain a cost-benefit balance as you work towards achieving SOX compliance.

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Fine-tuning your Operations and keeping our staff Happy with FieldElite

They are the engine that drives your operations, but are you really giving you value for your money? How much time is spent by your personnel on lengthy paperwork and record-keeping, as opposed to actually providing the service to your customers? Manual tasks create bottlenecks and slow your operations, which in turn affects service delivery and customer satisfaction. You want to reach more clients and boost your brand image, growing your market share and generating more revenue. Field Service Management (FSM) software comes in optimise the operations of your mobile workforce, cut down resource wastage, and enhance your productivity as a firm, by actually enabling your field staff to get more done, thus achieving their individual goals. In fact, according to a report published by Fortune Business Insights?, the global FSM market- which stood at $2.29 billion as recently as 2018, will have expanded to $7.27 billion by 2026. What does this mean for your employees, and how do they benefit from FieldElite?

  • Skipping the paperwork with end-to-end automation

Filing reports, keeping track of equipment used, working on the Excel sheets for multiple jobs on a daily basis, all through to the routing and billing- it can be a logistical nightmare. It’s not just about the hours spent poring through documents and typing away at calculators. Manual work exposes you to the risks of human error. Missing records, inaccurate assessments of the situation on the ground due to the overwhelming data streaming in, putting the head office staff under strain- it all hampers the productivity of the company. 

Take scheduling for instance. You have different employees, and various jobs that need their attention, at different locations. It can be a plumbing company whose clients have water filters that need to be repaired, gas boilers inspected, leaking pipes fixed, and others who need new installations to be set up. Assigning your personnel to the different situations will need to take into account the type of job, and the amount of time that it will require, aspects such as the location and the crew that is closest to it. At the head office you will want to keep tabs on the jobs that are in progress, pending, complete, those on hold, and even those that have been cancelled. Running all these through traditional manual processes is enough to drive you to the edge. What’s more, tasks that slip through your fingers amidst the confusion will result in negative feedback from your customers- which you don’t want hitting your brand.

With a field service job management software like FieldELite, you get to handle it all from one dashboard. Optimise your service delivery using the accurate scheduler, that allows you to account for the location of your employees, the status of the job- from the urgent ones like emergency tasks, to the normal duties such as routine maintenance, and low-priority tasks. The field service scheduling software comes with a real-time location feature that allows you to determine the employees closest to the client’s premises who will be appropriate for the job, map out the service areas and give you a birds-eye view of all the operations on the ground, while being updated with the progress of each specific task. Less time is spent travelling to- and from the central office, and more on actually tending to your client’s needs. You can even have situations where you can assign end-of-day tasks to employees who will be passing on that route on their way home.

  • Enhanced resource utilisation that promotes personal and professional development

Skill is key across the industries- from electrical services, solar panel installation, landscaping, home remodelling, pest control, plumbing, HVAC system maintenance, to construction and property management. For the job to be done appropriately and make your clients happy, you want to assign the task to an employee who is particularly proficient at it. This tends to be glimpsed over during manual scheduling since the personnel at the head office will be swamped with so many files, and will pick the first one that comes close to fitting the job description, leading to overlapping of roles. Sure, they may get it done, having seen their colleagues do it and even helping them out when they worked together before on similar projects- but will it be up to the required standard? On the other hand, the FSM allows you to ensure that you get the right technician for the task- who will be more motivated, boosting their performance.

What about accidents? Your employees want to feel safe as they go about their mandate. Many of the field service jobs are hazardous- such as electrical repair jobs, window cleaning tasks at high rise buildings, to elevator repair jobs where a slight glitch can lead to severe ramifications. Field service management software also comes in handy here, where the head office can be notified of any emergency the moment it occurs, and arrange for the necessary action to be taken immediately. That way, your employees will not feel neglected while they are out in the field, showing them that their safety is a priority to your business- which in turn increases their morale. 

  • Readily available knowledgebase and feedback system

When the employees have been assigned a specific job, they will require certain information about it. This includes the scope of the task, history of previous repairs or maintenance that was carried out, accompanying images if needed, risk assessment, any hazards or contaminants that they will need to prepare for, to notes left by technicians who had handled it. Having to keep checking their email, or picking up documents at the office for the day’s job and walking around with them all day as they tend to one customer after another, will slow things down, and not to mention frustrate them. However, the FSM system is directly accessible by the employees via app on their phones. The information needed for each specific task will thus be at their fingertips, speeding up the process and ensuring that they will be ready for each project being handled. 

While carrying out the job itself, the employees will use the very same app to update the system on how it is progressing, chat with the staff at the head office, update the inventory and even place orders for extra parts if necessary. Since mobile service management software apps like FieldElite also work in offline mode, the photos, reports and other entries that are made are collected by the app and saved on the device. Once a network connection is established, they are then updated to the central database- thus ensuring that the job can proceed regardless of the location. 

Once the job is completed, the customer input is also taken, registered in the system through their e-signature. A signoff comment included gives the customer the opportunity to indicate their experience with the job, and the feedback that they would like to provide. In case the job has not been completed, then the scheduling software kicks in, putting it in queue for another appointment to take care of the task, or resolve the issue that had caused it not to be completed the first time. The completed tasks head right to invoicing, which is also handled within the field service management platform, making it a seamless task for the head office staff.

How To Get Started with your IT Compliance Efforts for SOX

There’s no question about it. For many of you top executives in the corporate world, all roads leading to a brighter future have to go through SOX compliance. And because the business processes that contribute to financial reporting (the crux of the Sarbanes-Oxley Act) are now highly reliant on IT systems, it is important to focus a good part of your attention there.

It is a long and arduous path to IT compliance, so if you don’t want your company to fall by the wayside due to inefficient utilisation of resources, it is important to set out with a plan on hand. What we have here are some vital information that will guide you in putting together a sound plan for SOX compliance of your company?s IT systems.

Why focus on IT systems for SOX compliance?

We’ll get to that. But first, let’s take up the specific portions of the Sarbanes-Oxley Act that affect information technology. These portions can be found in Section 302 and Section 404 of the act.

In simplified form, Section 302 grants the SEC (Securities and Exchange Commission) authority to come up with rules requiring you, CEOs and CFOs, to certify in each annual or quarterly financial report the following:

  • that you have reviewed the report;
  • that based on your knowledge, the report does not contain anything or leave out anything that would render it misleading;
  • that based on your knowledge, all financial information in the report fairly represent the financial conditions of the company;
  • that you are responsible for establishing internal controls over financial reporting; and
  • that you have assessed the effectiveness of the internal controls.

Similarly, Section 404, stated in simplified form, allows the SEC to come up with rules requiring you, CEOs and CFOs, to add an internal control report to each annual financial report stating that you are responsible for establishing internal controls over financial reporting.

You are also required to assess the effectiveness of those controls and to have a public accounting firm to attest to your assessment based upon standards adopted by the Public Company Accounting Oversight Board (PCAOB).

While there is no mention of IT systems, IT systems now play a significant role in financial reporting. Practically all of the data you need for your financial reports are stored, retrieved and processed on IT systems, so you really have to include them in your SOX compliance initiatives and establish controls on them.

Now that that’s settled, your next question could very well be: How do you know what controls to install and whether those controls are already sufficient to achieve compliance?

Finding a suitable guide for IT compliance

The two bodies responsible for setting rules and standards dealing with SOX, SEC and PCAOB, point to a well-established control framework for guidance – COSO. This framework was drafted by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) and is the most widely accepted control framework in the business world.

However, while COSO is a tested and proven framework, it is more suitable for general controls. What we recommend is a widely-used control framework that aligns well with COSO but also caters to the more technical features and issues that come with IT systems.

Taking into consideration those qualifiers, we recommend COBIT. COBIT features a well thought out collection of IT-related control objectives grouped into four domains: Plan and Organise (PO), Acquire and Implement (AI), Deliver and Support (DS), and Monitor and Evaluate (ME). The document also includes maturity models, performance goals and metrics, and activity goals.

A few examples of COBIt’s detailed control objectives are:

DS4.2 – IT Continuity Plans
DS4.9 – Offsite Backup Storage
DS5.4 – User Account Management
DS5.8 – Cryptographic Key Management
DS5.10 – Network Security
DS5.11 – Exchange of Sensitive Data

By those titles alone, you can see that the framework is specifically designed for IT. But the document is quite extensive and, chances are, you won’t need all of the items detailed there. Furthermore, don’t expect COBIT to specify a control solution controls for every control objective. For example, throughout the control objective DS4 (Ensure Continuous Service), you won’t find any mention of virtualisation, which is common in any modern business continuity solution.

Basically, COBIT will tell you what you need to attain in order to achieve effective governance, management and control, but you’ll have to pick the solution best suited to reach that level of attainment.

Articles highly relevant to the one you just read:

Month End Accounting The Way It Should Be Today
Spreadsheet Woes ? Burden in SOX Compliance and Other Regulations
Spreadsheet Woes ? Limited Features For Easy Adoption of a Control Framework
How Internal Auditors Can Win The War Against Spreadsheet Fraud

Virtualisation

Using an IT solution that can provide the fastest (but still reliable) disaster recovery process is essential for the success of any business continuity plan. Although virtualisation is still considered leading edge technology by many business continuity specialists, it definitely brings a promise that, once fulfilled, can result in the cheapest, fastest, and most comprehensive solution for business continuity.

One great advantage of virtualisation over traditional BC (Business Continuity) methods is the relatively cheaper cost needed to achieve a certain level of business continuity assurance. Thus, more companies will find it easier to reach their required minimum for BC assurance. By contrast, some BCPs (Business Continuity Plan) based on a physical environment require companies to invest more than what they are willing to in order to reach the same minimum level of assurance.

Virtual machines, which can already encapsulate your operating systems and their corresponding applications, can be transported as a file from one machine running a compatible hypervisor to another. This makes the business continuity tasks of backup, replication, and restoration simpler and faster.

As of 2008, about 54% of IT professionals in Europe were willing to implement virtualisation within a maximum of two years. Furthermore, the expected compound annual growth rate of installed virtualised servers from 2008 to 2012 is already pegged at 33%.

If you want your organisation to take advantage of the benefits of this revolutionary technology, we’d be more than willing to help you discover what it can do for you. Then once you decide to make that transition to virtualisation, we can guide you every step of the way.

  • As not all applications are suited for virtualisation (e.g. some are too demanding on I/O and memory access), we’ll start by reviewing your entire IT system to see which portions can be implemented on a virtualized environment.
  • Using virtualisation and replication, we can conduct disaster recovery tests using up-to-date data without interrupting operations in your main IT site. Running these tests will increase your team’s preparedness and will allow you to discover possible weak points.
  • Provide a simple but comprehensive protection and backup system that encapsulates not only data, but also system configurations and application installations. This kind of setup allows for faster and easier disaster recovery operations. Because of these same characteristics, you can enjoy zero downtime while performing scheduled maintenance operations.
  • Since virtual machines are hardware-independent and transparent to operating systems, we can help you run a mix of legacy and new systems as well as open source and proprietary systems, allowing for more flexibility in your BCP budgeting.

We can also assist you with the following:

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