AutoRek may be able to assist your organisation in demonstrating compliance with new control regulations introduced and operating in the post Enron corporate environment, and particularly those firms in the financial services industry and /or dealing with complex and numerous financial instruments.
The introduction of Sarbanes-Oxley[1], and the increased emphasis of SAS 70[2] and current FRAG 21[3] requirements impact financial services organisations. A common theme across these changes is that of the importance of the existence and effectiveness of the controls in place – and, importantly, the ability to demonstrate this to external parties, clients and auditors.
What is AutoRek?
AutoRek is a transactional matching software system, designed specifically to manage risk, improve control, lower costs, minimise error and maximise productivity for all back-office treasury, cash operations and settlement reconciliation departments. The controls operating in such departments frequently fall under the scrutiny of the aforementioned regulations.
AutoRek transaction reconciliation suite tackles the issues encountered by all organisations wishing to:
AutoRek automatically reconciles the vast majority of transactions and delivers powerful support to the manual process of resolving problematic exceptions. The results include, reduced risk, accurate reporting. increased efficiency and motivated focussed staff.
In reviewing this functionality and key operational objectives of AutoRek against the requirements of a SAS 70, for example, the focus not only on a control function that can demonstrate operation, it also considers the effectiveness of such controls. Thus, if a manual or ad-hoc matching solution is currently in place, AutoRek is a proven matching solution that has been implemented by many clients including [insert key clients].
How can it help?
Using the UK FRAG 21 infrastructure and guidelines, as an example. Put simply, the FRAG guidelines provide a framework for investment management firms and outsource providers to document some of their key controls. These controls are tested by reporting accountants and the report and findings are published and shared with clients. One of the many control objectives stated by Custodians and Investment Management firms, is that of client security reconciliations (stock reconciliations). A typical objective may be ‘conduct stock reconciliations of portfolios on a monthly basis’. Such controls are exactly for which AutoRek was designed.
As an example this has been successfully implemented as Barclays in their Personal Investment Management area. AutoRek was implemented to undertake stock and dividend reconciliations for this significant UK stockbroker. The systems handles in excess of 3000 daily transactions. The implementation assisted in making the operations area more efficient and flexible. Such operational areas are frequently reviewed and audited as part of the assessment in reporting on FRAG 21 or SAS 70 reports, and will likely be subject to Sarbanes-Oxley evaluation.
Other examples include working with Davy Stockbrokers and Rathbones where stock reconciliations were tackled by AutoRek. For CIGNA healthcare the tool was implemented to undertake cash reconciliations across multiple country and currencies. The additional reporting data that was available from the systems enabled trend analysis and analytical review supporting the risk analysis of these transactions.
Advantages of using AutoRek include:
High Performance Automated Matching Engine
AutoRek encompasses the Automated Matching Engine – this will typically match between 75% and 98% of all transactions automatically, leaving only the true exceptions to be investigated and manually resolved.
So not only does this automate the process, but it assists key business processes by identifying true mismatches; this may help in reducing the number of reporting exceptions and possibility of exceptions included within a control document such as a FRAG.
Fully Audited
AutoRek tracks history of every item providing a full trail of matches between items. Every match can be uniquely identified, examined, undone or annotated.
Therefore providing reporting accountants and auditors with a trail to follow, a system to rely upon and the ability to investigate transactions at a detailed level. This may help senior management with their responsibilities under Sarbanes Oxley section 404, where they are required to contain management assessments of the effectiveness of the internal controls and financial reporting structure.
Other key advantages include:
In summary AutoRek can assist with:
SAS 70 reporting & FRAG 21 reporting – for areas such as stock and cash reconciliations, custody reconciliations and treasury reporting; it assists in providing an auditable reconciliation tool for such operations and can be used to demonstrate and evidence the effectiveness of the controls (as required by SAS 70 reports).
For Sarbanes-Oxley, as well as providing a control to assist in reconciling transactional data for treasury, foreign exchange and security operations it may be used to assist in the demonstration of the management evaluation undertaken.
[1] Sarbanes-Oxley Act 2002
[2] United States Statement of Auditing Standard 70 ‘[outstanding – to be implemented]
[3] FRAG 21