Article

Having faith in your public sector business processes

Use the term “internal controls” and you may lose your audience as their eyes glaze over. "That's for auditors" is a common response. But business processes are nothing more than another name for internal controls (i.e., “how we get things done in our organization”)

Now tie internal controls with “faith,” which is defined as “confidence in what we hope for and assurance about what we do not see.” In other words, once a business process is designed, tested and incorporated into official policies and procedures, there is faith it will perform and deliver the results desired on its initialization without constant review and oversight.

Sometimes it’s necessary to revisit that faith in the process to ensure processes still work as designed for your utility or public sector organization.

Designing business processes

Designing a tight business process involves asking process owners a lot of questions of about “what do you do as part of your role in the process of xyz”? Then documenting the “xyz” process and dissecting it to determine if it is effective or needs improvement. In Designing operational efficiencies through process mapping, we walked through the overall work plan used in analyzing business processes, focusing on Step 2:

  1. Interview process owners for the process under review
  2. Document the detailed steps in the process via narrative or process mapping
  3. Test the process in action from beginning to end to determine process owners are doing what they said they do in the interview
  4. Analyze the process for inefficiencies or improvements
  5. Make recommendations for change
  6. Train process owners the new process
  7. Perform follow-up testing to determine the process is working as designed
  8. Train process owners and repeat as necessary until the new process is operating as desired

This article digs deeper into Steps 3, 4 and 5 of the above work plan.

Analyzing the process

How a process is designed to work does not always mirror real-time performance. Operation of a policy and procedure may degrade over time, even as the original design may still be sound. Contrarily, some processes defined by policies and procedures must change over time, due to changes in technology or the core business process.

Often, the current owner of a business process may have excellent ideas on how the process can work most effectively. You must be willing to toss out or modify the playbook on the process to gain those efficiencies. interviewing process owners, documenting their steps through business process mapping and then analyzing the steps for efficiencies is part of Step 4. This analysis will be most effective with the current process owner, not only to ensure you've a proper understanding of what steps are being performed and why, but to glean the process owner’s insights for modifications.

Making recommendations and testing processes

After the process has been defined and refined, make a business process map for the process. Upon approval of the new process, train appropriate employees step-by-step in the new process.

After an interval of time for these process owners to gain confidence in the new process, an organization’s internal audit function or another "tester" should do a walk-through of the process to determine whether it is being performed as designed. If it isn't, then repeat training and testing to gain faith that the process is now on auto-pilot. Even with faith, retesting should be done at intervals as a regular part of an internal audit plan.

Applying this to the overall organization

The work plan described above is for use on one process or area. This approach should be applied to all of the key processes in your utility or public sector organization – a vast but necessary undertaking. By developing and executing work plans that revisit each process, your organization will enhance its business process improvement culture.

For more information on this topic, or to learn how Baker Tilly power and utilities specialists can help, contact our team.

Russell A. Hissom
Partner Emeritus, CPA, CIA, CISA, CRMA
Financial Reporting Manual is updated
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