Is ITGC testing needed prior to pre-ERP implementation? 2806

  • Hello everyone,
    I would like to get someone’s thoughts on whether we need to do Point in Time testing (PIT).
    Our company has normally done PIT testing in the past just prior to SAP implementation. The PIT testing covers ITGC and automated/access controls which can not be tested after the SAP implementation such obtaining system access list. Our company also does not plan to perform SOX testing for manual controls prior to implementation. They plan to test SOX for these controls after implementation.
    This year, our company is having SAP implementation in April 2010. My question is do we need to do PIT testing given that we won’t be testing SOX manual controls prior to implementation. Also, we plan to perform substantive testing from Jan April 2010, which would further reduce the risk on financial reporting, so I am not sure if PIT testing is needed. Appreciate any thoughts on this topic. Thank you.

  • Management’s assessment of the effectiveness of internal control over financial reporting is as of the end of the financial year (section 404(a) SOA). If you implement SAP in April 2010 and if that is before the end of your financial year, you do not need to test the effectiveness of ICFR before the SAP implementation for purposes of section 404(a) SOA.
    However, management or the audit committee may be voluntarily be interested to ensure that there are no material misstatements in your financial reporting between April 2010 and the end of the financial year. Your registered public accounting will test the effectivenss of most of ICFR during the full financial year as a basis for the audit of the income statement.
    It may make sense the audit the planned customizing settings, master data entries and data migration plans that may have an impact on financial reporting BEFORE the implementation to ensure that no errors occur. Common sources of errors are a lack of inquiry of the needs of accounting and of accounting standards before making customizing and master data settings and a lack of training of users in modules that have an impact on financial reporting (FI, CO, MM, SD, PP). I have seen that users entered things incorrectly or did not perform certain steps because they were not properly trained how SAP works.
    An audit of the account determination rules in the MM customizing and of the account finding rules in SD is always a good idea. You should also check the value added tax/sales tax settings in the customer master data and product master data and in purchasing info records.

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