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Our Tech Risk IT system assessments team can help your business identify internal controls risks prior to IT system implementations. Learn more.
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Organizations are exploring technological changes to reinvent business processes, offer new customer products and enhance or streamline financial processes, such as consolidation and reporting.
As organizations undertake IT transformations, proactive IT risk assessments are strongly encouraged.
New technology introductions have implications for the audit, financial reporting and other essential business functions. When companies adopt those technologies without sufficient planning, it can lead to a delayed realization of benefits, increased risks and potential loss of customer and investor confidence.
Technology implementation failures often stem from insufficient testing, underestimated costs and challenges integrating legacy and new systems. Risk assessments, pre-implementation assessments and IT risk assessments examine the project, compliance obligations, system architecture and the effects on internal controls and the business to identify potential risks and inefficiencies.
Recently, a large US-based regulated power and utility company used this proactive approach as it sought to enhance its financial processes and reporting accuracy by upgrading its ERP software.
The benefits of an upgrade were clear. It is well-known that centralized data management can facilitate real-time decision-making and that poorly structured data often leads to inaccurate results and moving data between systems can increase risks. However, this organization’s leaders also knew that their multiyear ERP system implementation had the potential to cause short-term disruptions, impact multiple classes of transactions and affect how audits and financial reporting would be conducted in the future.
The power and utilities company established an integrated team and worked with EY Tech Risk to assess the inherent risks of the implementation.
“We understood the specific risks and challenges of this transformation and tailored our strategy to match the client’s needs,” said Edward Campbell, EY Americas Technology Risk Expanded Assurance Leader. “This early involvement of advisors experienced in technology integrations and risk management led to a seamless transformation for management to upgrade their financial systems.”
As a direct result of this pre-emptive approach, this organization was able to maintain operational continuity, mitigate internal control risk, reduce audit risks and set a new standard for efficiency and transparency in the process.
Technology implementations and transformation programs are on the rise
Many organizations, regardless of sector, will find themselves in the same situation as the power and utilities company.