TAKING GOVERNANCE TO THE NEXT LEVEL

Resolution No.1 2017 of ADAA
(Abu Dhabi Accountability Authority)

WHAT THE RESOLUTION IS ALL ABOUT

Accurate financial reporting not only serves as a baseline to assess any entity’s performance, but also is pivotal for planning the future. The significance enhances many folds when it comes to utilization of public finances and reporting the results of the same.
With this background the ADDA Resolution No.1 of 2017 requires the statutory auditor to test the effectiveness of internal controls over financial reporting and issue an opinion on its findings.

In addition to that it also requires the statutory auditor to verify an entity’s compliance with Law Number (1) of 2017 concerning the financial system of the Government of Abu Dhabi and Department of Finance instructions as well as the law of establishment of the entity.

Based on our experience we are pleased to share here some of the insights which can help entities realize the true potential of this exercise

WHAT ENTITIES NEED TO DO

Internal Control Implementation

Plan

  • Establish Project Steering Committee
  • Map Business Processes & Sub Processes with Financial Statements
  • Identify and finalize Process Owners
  • Brief the organization’s key stakeholders on the project & its significance
  • Establish & communicate detailed project timelines

Assess as is

  • Understand/document current business processes
  • Map underlying Objective, Risks & existing controls
  • Document existing controls and assign Control Ownership
  • Identify and communicate the control gaps


Bridge the gap

  • Recommend additional control elements to bridge the design gap
  • Communicate & agree with the stakeholders
  • Present control gaps along with recommendations/action steps to Project Steering Committee




Implement

  • Establish detailed action steps and responsibilities for bridging the design gap
  • Monitor performance
  • Assess the effectiveness of implementation







Test

  • Develop testing procedures to assess the operational effectiveness of controls
  • Identify independent testers
  • Review the result
  • Take corrective action where required





Trap you may fall into

01

Higher the number of controls; the better it is

02

Placing too much emphasis on the evidence of control being performed.

03

Using regulatory requirements as a lever for internal marketing and buy-in

Challenges & hurdles

01

Inculcating the right mindset across the organization i.e. “it is not just for compliance”

02

Creating strong linkages between objectives, risks and controls

03

Bringing controls automation within the project time frame

Value generating opportunities

01

Getting rid of redundant tasks by linking activities to the “Objectives” & “Risks”


02

Development of balanced business processes by giving due consideration to “Operations” objectives in tandem with “Reporting”.

03

Bringing efficiency in current processes through more preventive and automated controls

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