Back in August 2009 (seems like a long time ago) I posted “It’s the People in the Process Who Matter” on this blog. The general premise of that post was that most business process and internal control failures start and end with people. It starts with people who make decisions to design and implement (or not) proper control systems that ensure that their organization is protected, that its assets are used in efficient and effective ways, and that the organization is not adversely impacted through someone’s fraudulent activities. It then moves to the people responsible for ensuring that the control processes operate and remain effective.

In the last week or so, I have read articles on two rather disparate topics that brought these thoughts back to mind.

The first article appears in the January 2010 issue of Finance & Management, a publication of the Institute of Chartered Accountants of England and Wales (ICAEW.com). The article is titled “Bribery and Corruption — Protecting Your Business.” While the author mainly talked about establishing business policies and practices that address the risk of bribery and corruption, she did make one statement that I think is critical to the effectiveness of any business process: “Obtaining the commitment of staff is crucial to the success of your business polices and processes.”

The second article from CFO.com is called “The IFRS-IT Connection” and can be found here. The writer reports on the lessons being learned by Canadian companies in the implementation of IFRS (International Financial Reporting Standards). The article includes this statement: “One lesson: While the finance function naturally should drive the conversion project, the high-level participation of information-technology leaders is essential, especially in complex organizations.” One company took the approach of establishing a “tight partnership” between accounting and IT as one of their first steps in the IFRS adoption process. This is because they saw the importance of working together to assure that their accounting/ERP systems and internal controls would be “… sufficiently robust to account for the various components” of IFRS.

So what is my point here? It is the same point I made in August: “… it is critical to never lose sight of the importance of keeping the people aspect of any business process and internal control system in the front of your mind.” People are the biggest factor in the effectiveness of your business processes and internal control systems. ###