Proposal
for a
(Org Name) - ICI - Consultant
Partnership
to obtain an International
“Quantitative Rating for Internal Control”
Quantitative Rating for Internal Control
Developed as
• Internal Control 2nd Opinion®
• Support opinions provided by
management and the auditors
Internal Control
Assessment versus Rating
• Assessment:
Uses policies, standards, and accepted
practices to develop an opinion on the
adequacy of internal control
• Rating:
Compares an organization’s actual internal control
system and activities against the COSO model then
based upon that comparison develops a score
between zero and one thousand
Example:
Restaurant Assessment vs. Rating
Assessment: “a good restaurant because………”
Rating: “five stars” (on scale of one to five stars)
Why Is a Quantitative Rating System
of Internal Control Needed?
• Enables management to better understand the
adequacy of their internal control system (a
number versus an opinion) and to:
• Develop an Improvement Plan
Why Rate Quantitatively?
• A number is easier to understand than an
opinion
• CEO’s / CFO’s have to attest to the adequacy
of controls
(Sarbanes-Oxley Act Requirements)
Is a Quantitative Rating System
Credible?
• Complete the Assessment Using
Internationally Recognized Models
 COSO Framework
 MBNQA
 ICI Expertise
COSO (Committee of Sponsoring Organizations)
• Five Major Accounting Associations

Financial Executives Institute
 American Institute of CPA’s
 American Accounting Association
 The Institute of Internal Auditors
 Institute of Management Accountants
• Internal control framework recognized
by the SEC
MBNQA – Malcolm Baldrige National Quality Award
• Established by legislative action
• One of the world’s best models for
developing a quantitative score for a
subjective topic (quality)
COSO Model
Information
Monitoring
&
Communication
Environment
Processes
Practices
Each of the Above Components Have Assessment Models
How the Assessments Process is Built
ICI
MBNQA
COSO
Professional
Staff
Assessment Process
Examiners
How are Examiners Obtained?
Attend
Applicants
Must be a
CICS or
Equivalent
Training
Course for
Scoring
Pass
Certified
Scoring
Examiner in
Exam
= Internal Control
(CEIC)
What Happens to the Assessment Results?
Assessment Results
OPTIONAL
Internal Control
Assessments
Client
Process
Usage
Report
Reduced
D&O
Insurance
Premiums
ICI
Internal Control
Database
How is the Internal Control
Database Used?
ICI’s
Internal Control
Database
Compare
Against Client
Assessment
Identify
Significant
Worldwide
Internal Control
Weaknesses
Quantitative Internal Control
Assessment Timeline
(Critical Path)
•Train examiner(s) in completing the documentation 1 week
• Company completion of internal control
documentation
4-6 weeks
• Administrative review of assessment by company
1 week
• Examiners score and report results to ICI
2-3 weeks
• ICI reviews assessment for improvement with
possible submission to insurance company
1 week
Assessment Process Total: 9-12 weeks
Division of Work
ICI
• Maintain and update the assessment process as
necessary
• Provide the training program for examiner(s)
• Write the exam for examiner(s)
• Review assessment documentation when completed
• Assists in assessments / forums if necessary
• Update the assessment process as needed
Division of Work
Consultant
• Work with Client to identify examiner(s)
• Teach client how to document their internal control
system
• Administer the ICI scoring exam for examiner(s)
• Work with the client to complete the documentation
• Maintain liaison with client during the ICI review
process
• Provide the ICI assessment review to the client
Division of Work
Company Under Assessment
•
•
•
•
Identify examiner(s)
Provide time for examiner training
Complete the assessment documentation
Maintain liaison with consultant during the review
process
• Participate in the assessment review presentation by
consultant
Conclusion
Corporate Benefit of the ICI Assessment Process
• Provides management with an “Independent
2nd Opinion™”
(for improving internal control)
• Different from a financial audit (not subjective)
• May benefit from reduced D & O insurance
premiums
That’s All Folks
Thank You