Page 115 - CITP Review

The approach to gaining a proper understanding means that the CITP will need to know the flow of data
or the body of processes used in financial transactions and financial reporting.

In understanding the processes that ultimately result in transacted business information, the CITP will
want to gain an understanding of the information flows of accounting cycles and other areas of financial
transaction management. This understanding can be obtained through walk-throughs, observations,
interviews, and system analysis. Examples of cycles and classes of transaction include the following:

 Revenues (sales, receivables, cash collections, and so on)
 Disbursements (bills, checks and payments, credits, payroll, and so on)
 Conversion (inventory, manufacturing, or job cost, where applicable)
 Journal entries
 General ledger
 Financial reporting

Integration of internal controls into business processes
Internal control is both a structure and a process. The main goal is to ensure that there is expert input
into BPrM regarding controls.

Each entity should have a formal structure for designing and implementing the proper level and
effectiveness of controls into the body of business processes. That structure could take various forms,
including a form of IT governance, a change management committee, a cross-functional BP steering
committee, an expert on business process change team, and so on.
There should also be a formal process for ensuring that there is a sufficient system of internal controls.

The entity should have P&P that ensure the use of expertise in integrating effective controls into all
relevant business processes. That expertise could be an independent internal auditor or accountant, a
consultant, a change committee function, an IT governance function, an IT steering committee function,
and so on.

The process should also include formal monitoring to close the loop on improvements to controls.

Business activity monitoring and key performance indicators
Business activity monitoring (BAM) is software that automatically monitors business activities
embedded in information systems. It refers to the aggregation, analysis, and presentation of real-time
information about those activities. BAM can also address multiple business processes, including those
that span multiple systems or applications.

Typically, the results are displayed in a dashboard style, where real-time results are compared to KPIs.

 When performance is in acceptable bounds, within criterion established for a specific KPI, then the
dashboard uses a green symbol or some other icon to communicate acceptable performance.
 If the performance is slightly outside of acceptable bounds, then the symbol is yellow (caution) or
similar icon.
 If the performance gets to an unacceptable level, then a red symbol, or similar icon, is used to
indicate the seriousness of the current performance.

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