The New Reality for Customer Engagement
Date: 5/31/2018 @ 1 p.m. ET
Step 3: Avoid Garbage
What's the role of technology? Make sure the quality of the data going into reports means there's nothing inaccurate coming out.
The sleuthing game for IT involves figuring out where systems issues, such as the processes baked into customer relationship management and sales force automation, affect financial reporting. You must be able to document how the chain of financial reporting works and how your information systems support it. And you must have a clear idea of where that chain can break down, and be prepared to survive an audit of those processes in case something does break.The trick is knowing just how IT systems grease the flow of any potentially erroneous or inconsistent informationor even help create it.
Suppose a hypothetical widget manufacturer has a relatively loose process for recording orders and payments. While no fraud may be intended whatsoever, salespeople are allowed to book orders lacking absolute certainty that a sale will be completed.
Or suppose a software company allows revenues to be recognized before an application was signed off as a released product. The result under Sarbanes-Oxley: Your company may be overstating revenue in one quarter that requires restatement the next. That was bad enough in the pre-Enron world, but it's tantamount to Russian roulette today.
There's also the speed with which the SEC wants to be notified if "germane" events occur that could affect financial reports. For some issues, 15 business days are allowed to lapse before notification must be provided. For others, it's rumored that the SEC may get anxious after only two days.
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