Sign offs - just how important are they..... 2327

  • Okay, so I realize that, in the current age of 404 compliance, accountability via sign off is important to satisfying certain aspects of control objectives. However, in the presence of a positive control environment, in addition to reperforming the controls in question with no resulting issues to report, does a missing signature/approval amount to a control deficiency? As the internal auditor, I am confident that, for example, the month end b/s accounts are reconciled, reviewed, and approved, with all variances being resolved. However, the test/control description requires the verification of sign off by appropriate manager and reperformance by the tester. And this being a pervasive issue across all subs, would this amount, in the aggregate, to a significant deficiency?
    My initial thought is to note each occurrence as a control deficiency, if only to emphasize to management the need for sign off approval moving forward. Am I splitting hairs here, or is this a valid concern?

  • Hi Igor13,
    I have recently discussed this topic with my external auditor (a Big 4). Accordingly to them, account reconciliation should be signed off, but we didn’t.
    We agreed that the control would pass (no deficiency) in the test and we (internal and external auditors) would make a recommendation of improvement to the accountant department.
    As COSO suggest, we should assess if the level of documentation is appropriate according to the company size.

  • I don’t see an occasional missing sign-off as a deficiency. If it is the norm to not sign off, then I do see that as a deficiency. Management review (and evidence of that review via a sign-off) is an important control for us. If review can be evidenced in another fashion, that is OK.

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