Best Practices for Building a Robust Financial Controls Framework

A strong financial controls framework is the backbone of any organization’s financial integrity, safeguarding assets, ensuring compliance, and fostering stakeholder trust. As consultants, we’ve seen how gaps in controls can lead to fraud, inefficiencies, and regulatory headaches. Here’s our playbook for designing and implementing a best-in-class framework tailored to your organization’s needs.

1. Start with a Risk-Based Foundation

Before drafting controls, conduct a thorough risk assessment. Identify high-impact areas like revenue recognition, procurement, or payroll. Prioritize risks based on likelihood and potential damage.

Tip: Use tools like heat maps to visualize risks and align controls with the organization’s risk appetite.

2. Design Tailored, Lean Controls

Avoid a one-size-fits-all approach. Customize controls to address specific risks without overburdening workflows. For example, automate approvals for high-value transactions but keep manual checks for niche processes.

Insight: Overcomplicated controls breed non-compliance—simplicity drives adoption.

3. Leverage Technology & Automation

Modernize manual processes with ERP systems, reconciliation tools, AI-driven anomaly detection, or robotic process automation (RPA). Platforms like AutoRek, Aurum, Duco, etc streamline reconciliations and reduce human error.

Priority: Ensure systems integrate seamlessly with existing workflows to avoid silos.

4. Enforce Segregation of Duties (SoD)

No single employee should control all aspects of a critical process. Separate authorization, custody, recording, and reconciliation roles.

Warning: SoD conflicts often arise in small teams—use compensating controls (e.g., managerial reviews) where staffing is limited.

5. Monitor, Test, and Iterate

Controls aren’t “set and forget.” Implement continuous monitoring (e.g., dashboards) and periodic audits. Stress-test controls through scenario analysis or third-party reviews.

Mantra: “Trust, but verify.”

6. Document Everything

Clear documentation—policies, procedures, roles—is critical for audits, training, and scaling. Use centralized platforms like SharePoint or Confluence for easy access.

Hack: Link controls to compliance requirements (SOX, COSO) to streamline reporting.

7. Invest in Training & Culture

Controls fail without buy-in. Train employees on the “why” behind policies and empower them to flag issues. Foster a culture of accountability through leadership tone and incentives.

Lesson: People are your first line of defense—not just technology.

8. Build for Agility

Regulations, risks, and business models evolve. Regularly revisit your framework to address emerging threats (e.g., cyber risks) or organizational changes (e.g., mergers). Insight: Embed feedback loops to stay proactive.

Final Thoughts

A dynamic financial controls framework isn’t just about compliance—it’s a strategic asset. By focusing on risk, simplicity, and adaptability, organizations can turn controls into enablers of growth rather than bureaucratic hurdles. As experienced consultants, our goal is to help you strike that balance.