Financial Process Review for UK-based Financial Services Company
UK Financial Services Company
A client providing vital infrastructure to the UK’s banking payments industry, supporting many stakeholders including well-known major banks, asked us to review the effectiveness of its internal controls over committing and approving expenditure. This request followed concerns identified by the Client’s Board in a brief investigation by one of its independent non-executive directors. This task was complicated by the fact that for some of its core finance-related activities, the Client relies on outsourcing of tasks to an external specialist company using a defined services framework agreement. The Client’s senior management retains all responsibilities for approval and initial review of expenditure invoices.
How we helped
The first step was to hold planning discussions with client management; followed up by reviewing relevant policies, procedures and contractual records and performing a forensic analysis of payments over the preceding year. We engaged with key employees from the Client and the outsourced service company. Our work identified that many expenditure-related processes involved people or teams across the Client and the external service company and that unstructured exchanges of information meant that specialist tasks and responsibilities had become diluted for overall expenditure processing, review and approval.
After further analysis, we identified other contributing factors including an excessive reliance on full-time contractors instead of full-time employees on a major internal project who were subject to less diligent policies and supervision. Analysis performed also identified that many expenditure processes were overly complex and that practices followed by employees and contractors were not always understood or effectively supervised by their managers.
We were able to demonstrate to management
that the quality and sufficiency of independent
review had been weakened. Plus, the many
interlinked factors, as evidenced in the results
shared with management, had also led to
reduced awareness and diluted accountability
for decisions. We recommended a detailed
series of corrective actions that collectively
addressed the weaknesses identified within the
extended corporate structures for processing
and approvals. Our recommendations were
quickly adopted and this resulted in significant
and immediate improvements in corporate
governance and expenditure controls.