Internal Audit Sonny

7/22/2019 Internal Audit Sonny

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InternalAudit

Sony

Internal

AuditPresentationto

ISACATokyo

Chapter

Tuesday,March12,2013

InternalAuditDepartment

SonyCorporation


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InternalAudit

Agenda

CaseStudy:AuditableRisksandProcedures3 AdvertisingandPromotion,DataAnalytics,Logistics,BPO

OverviewofSonyCorporation OverviewofSonyCorporationandHighlightsofFinancialResults

SonyInternalAuditDepartment2 IAStructure,GlobalAuditableRisks,ResourceAllocation,OffshoreSupport

2

1


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InternalAudit 3

Overview

of

Sony

Corporation


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InternalAudit 4

CorporateData

CompanyName: SonyCorporation

Headquarters: 171Konan,Minatoku,Tokyo

Founded: May7,1946

ConsolidatedSalesandOperatingRevenue: 6,493,200millionyen(FY2011)

Headcount: 162,700(asofMarch31,2012)

ConsolidatedSubsidiaries: 1,267

(as

of

March

31,

2012)

Overview


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InternalAudit 5

SonyCorporateHistory Overview

1946MayTokyoTsushinKogyoK.K.(TokyoTelecommunicationsEngineeringCorporation),alsoknownasTotsuko,establishedin

Nihonbashi,

Tokyo.1958January

1961June

CompanynamechangedtoSonyCorporation.

SonybecamethefirstJapanesecompanytooffersharesintheUnitedStatesintheformofAmericanDepositaryReceipts(ADRs)ontheOTCmarketoftheNewYorkStockExchange.

1979AugustSonyPrudentialLifeInsuranceCo.Ltd.,a5050jointventurewithPrudentialInsuranceCo.ofAmerica,established.ItwasrenamedSonyLifeInsuranceCo.Ltd.inApril1991.

1988January CBS

Records

Inc.

the

records

group

of

CBS,

acquired.

It

was

renamed

Sony

Music

Entertainment

Inc.

1989November ColumbiaPicturesEntertainment,Inc.acquired.ItwasrenamedSonyPicturesEntertainmentInc.

1993November SonyComputerEntertainmentInc.established.

1995November SonyCommunicationNetworkCorporationestablished.ItwasrenamedSonetEntertainmentCorporation.

2001April SonyBankestablishedinJapan.

2003June

2004April

Corporateshifttocommitteebasedorganizationalmodel.

SonyFinancialHoldingsInc.established.

2009September

2010June

SonyGroupunveilsnewbrandmessage"make.believe.

SonylaunchesNEXseries,theworld'ssmallestandlightestinterchangeablelensdigitalstillcameraseries.


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InternalAudit 6

SonyBusinessSegments Overview

Source:AnnualReport 2012(YearEndedMarch31,2012)


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InternalAudit 7

SonyGroupConsolidatedResults Overview


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InternalAudit 8

SonyInternalAuditDepartment


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InternalAudit 9

InternalAuditOrganization IADepartment

In2003,SonyadoptedtheCompanywithCommitteescorporategovernancesystemundertheCompanies

Actof

Japan.


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InternalAudit 10

InternalAuditOrganization IADepartment

OrganizationalindependencethroughdottedreportinglinetoAuditCommittee,anddirectlinetoEVP.

GlobalPlanningOffice

Audit

Committee

Top

Management

CorporateExecutiveOfficer,ExecutiveVicePresidentandGeneralCounselCorporateExecutiveOfficer,ExecutiveVicePresidentandGeneralCounsel

SeniorGeneralManager,HeadofGlobalInternalAuditSeniorGeneralManager,HeadofGlobalInternalAudit

SoMC SFHGroup

GlobalInternalAuditManagementTeamGeneralManagerandHeadofRegionalInternalAuditOffices

LatinAmerica

CAD(SCA)

Electronics

Music

Pictures

GAO(SCE)

SCEI

SCEA

SCEE

Japan

IAD

Europe

AsiaPacific

China


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InternalAudit 11

PurposeofInternalAudit IADepartment

Identifycriticalissues

Escalate tosenior

management

Makerecommendations for

improvement

Strategy

Execution

Audit

Abilityto:

IADs Mission: Identify Gaps Between Strategy and Execution

The Internal Audit Department (IAD) establishes and maintains the internal audit organization and internal audit activities

and formulates internal audit policies for the Sony group.

IAD plans and executes its activities utilizing a riskbased approach for the purpose of providing an objective and independent

assessment on governance, risk management and control processes for the Sony group.


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InternalAudit

RiskAssessment

Audit

StakeholdersGlobal Key Risks

Regional Risks

Planning

Fieldwork

Reporting

Consolidated

Reporting

Benchmarking

Good Practice

Issues

HQ

Region

Reporting

Concern

Request

StandardAuditProgram

CAAT

Tool

ExternalResources

12

InternalAuditProcess IADepartment


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InternalAudit 13

HistoryofSonyInternalAuditDepartment IADepartment

1997GlobalInternalAudit

1999RiskbasedAudits

SonyGroupG

lobalKeyAuditableRiskArea

s

GlobalInternalAuditCharter

GlobalIssueT

racking

GlobalAuditSummaryReporting

Renamedthe

InternalAudit

Department(IA

D)

AuditCommittee

establishe

dinSonyCorpo

ration

InternalAuditOfficeestablis

hedinLatinAm

erica(IALA)


hedinChina(IA

C)

Renamedthe

GlobalAuditD

epartment

StartedKnow

ledgeSharing

FirstRiskAsse

ssmentforSon

ygroup

InstituteofIn

ternalAuditors

JapanChairma

n'sAward

GlobalIntern

alAuditPolicyDeveloped


hedinSingapore(IAAP)


hedinEurope(IAE)

FirstSonyInternalAuditNew

sletterIssued

InternalAuditFunctionsepa

ratedfromAccounting


hedinAmerica

(SCA)

InternalAuditFunctionesta

blishedinAcco

unting

1968 1987 1993 1996 98992000 2002 2003 200405092011


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InternalAudit 14

GlobalCoordination

GlobalInternal

Audit

Structure:

Howtofocusonbettercoordinationi)amongIAofficesandii)withotherauditactivities?

Audit Collaboration

Collaboration withRegional Internal Audit

Regional Meeting /

Global Internal AuditLeaders Meeting

Central Support Team(CST)

Joint audit team with diversified experts from regional internal audit offices:

Collaboration with regional internal auditors in audit activities, e.g.

Scheduling Risk/scope assessment

Internal knowledge-sharing

Regional meeting held to share knowledge and experience among internal auditoffices, and conduct audit planning workshops

Quarterly Regional Meeting Annual Internal Audit Leaders Meeting

Established CST team in India, consisting of 6 members with professionalbackgrounds, centrally support the global audit activities in terms of:

Data analysis by CAAT tool

Information Security

System controls and IT projects management

IADepartment


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InternalAudit 15

Resource sharing is essential to share expertise and knowledge of the audit process in

realityAudit Resources

Nordic Europe,Japan

India AsiaPacific,Japan,Europe

Japan Japan,Europe

SouthChina Japan,AsiaPacific,Europe

HongKong Japan,Europe,AsiaPacific

PanAsia Japan, Europe,CentralSupportTeam

Japan Japan,Europe,CentralSupportTeam



Vietnam AsiaPacific, Japan

Gulf AsiaPacific,Europe,CentralSupportTeam

AuditCollaboration IADepartment

Europe

China

Japan

AsiaPacific

Americas


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InternalAudit 16

RegionalMeetings

Learn

from

Management

Team

Sharing

BenchmarkResults

Enjoythemanagementpresentationsandparticipate

Continuouslysharebetweenregionalteams

Domaindepthcredibilitybuiltfromexperience Continuouslydevelopsselfloveslearning UtilizetheAuditWorkshopstodiscussandbenchmark

Update internal audit team members on Business results/management direction, internal audit projects and

various audit planning topics. Provide an opportunity to listen to Sony/Internal Audit managements voice andalso, have common understanding of internal audit projects/audit planning status and discuss next actions.

IADepartment


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InternalAudit 17

TeamBuildingActivities SonyFutsalCup IADepartment


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InternalAudit 18

CentralSupportTeam(CST) IADepartment

EstablishaCentral

SupportTeaminIndia:

Provideinternalauditservices,suchasdataanalytics,datamining,continuousmonitoring,etc.toallinternalauditregionaloffices.

Allowregionalinternalauditofficesgreaterflexibilitytomeetbusiness

changes.SupplytalentedandexperiencedresourcestoallIAregions.

Scaleableresources minimiseregionalinternalauditcostswhilemaintainingahighstandardofaudits.

Provideadditionalsupporttoeachregionalinternalauditoffice.


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InternalAudit 19

CentralSupportTeam Benefits IADepartment

CST

DuringAudit

PostAudit

Adhoc

PreAudit

IncreasedFlexibility

Scaleupanddown

ReducesCosts

Minimiseregionalinternalauditcostswhilemaintainingahighstandardofaudits

MoreBenchmarkingOpportunities

Overviewofissuesthatcrossborders

Sharebestpracticesamongstinternalauditoffices

RiskAssessment AuditPlanning

AuditNotice/

Requestfor

Information(RFI)

Auditorsaccessto

ERPandothersystems

AuditPrograms

AuditFieldwork

AuditWorkpapers

ITAudit

UseofCAATs

Communication

andReporting

TrackingofAudit

Issuesthatspan

geographies

ProcessofsharingLeadingPractices

EstablishedtheSonyInternalAuditCentralSupport

Team(CST)inBangalore,India.

ThecostadvantagesofutilizingIndiaOffShoremodel

areasfollows:

CultureTolerantofmisunderstandings

Patient

Cheerful


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InternalAudit 20

CaseStudy:AdvertisingandPromotion


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InternalAudit 21

CaseStudy:DataAnalytics


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InternalAudit 22

WhyDataAnalytics? Background DataAnalytics

IncreasedAuditCoverage

Test100%oftransactions ImprovedcompliancewithCAP

ImprovedAuditEfficiency Analyticstestssupplement

traditionalauditworksteps Audittestsfocusedonexception

analysis

QuantifiableAuditResults

Fraud

Detection Increasingthefocusonfrauddetectionandmonitoring

ProvidesabasisforContinuous

Monitoring Welldesignedanalyticscan

evolveinto

continuous

monitoring

tools

BroaderAuditCoverage Auditresultsare

basedonasignificantlylargerpopulation

thansamplebasedapproachisused

Abletodrawonmultipledatasourcesandsystems

Definearepeatableapproachforintegratinganalyticsintoacycle

Analysisofdatatoidentifyanomalies,trendsandriskindicators

Analysisbasedonlargepopulationoftransactionsinsteadofsample

Usedtosupplementorreplaceotherprocedures inspection,inquiry,observation,andreperformance

l i f


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InternalAudit 23

DataAnalytics UsageofACL

ItisessentialtodefinetheroleswithintheIA

teamDecidewhodoes

what!

Worktogether

closely..

SOURCE:

IATeamwork

DataAnalytics

Hybridapproach:ACLexpertsandnonexpertsunderstandboththetoolandauditprocess.

Sincefieldauditorsunderstandthebackgroundoftheanalysis,

theycaninvestigatepotentialissueseffectively.

D A l i I d i h ACL CMM


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InternalAudit 24

DataAnalytics IntroducingtheACLCMM DataAnalytics

D t A l ti C C


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InternalAudit

Pretraining.ACLandCAATtoolsnotusedorimplemented.

Level0

Nonexistent

ACLnotusedorimplemented.

CanleverageexperiencefromotherCAATtools.Level1

Basic /Adhoc

ACLtrainingprovidedtoallteammembers.

Training/usagemethodologyexist,butarenotapplied.Level2

Applied

Expertsaresourceforregionalteams,OpsunderstandandutiliseACL.

ConsistentuseofACLriskcoverage, efficiencies.

AuditreportsandfindingsarereflectiveofACL usage.

Level3

Managed

Methodical,systematicuseofACLacrossallaudits.

Bestpracticesandtemplatessharedacrossauditteams. CAATsscripts areautomated.

Level4

Automated

Abilitytoprovidemonitoringresults.

Identifyredflagspriortoauditsoroccurrenceofissue.Level5

Monitoring

25

DataAnalytics ACLCMMand(current)RegionalPlacement DataAnalytics


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InternalAudit 26

CaseStudy:Logistics

Logistics Complexity of the Business


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InternalAudit 27

Logistics ComplexityoftheBusiness Logistics

Planningand

Forecasting

Planningand

Forecasting

FinanceandTaxation

Distribution

Network

Distribution

Network

OrderProcessingOrderProcessingRepairs

ManagementRepairs

Management

ProcurementProcurementContract

Management

Contract

Management

Freight

Consolidationand

Forwarding

Freight

Consolidationand

Forwarding

Dispatch

Management

Dispatch

Management

InsuranceManagement

InsuranceManagement

SalesandMarketingSalesandMarketing

Partner

Management

Partner

ManagementBillingBilling

Inventory

Management

Inventory

ManagementReverseLogisticsReverseLogistics

QualityControlQualityControl PricingPricing

Customs HandlingCustoms Handling

HRMISandReportingITandSystems

BUSINESSUNITSBUSINESSUNITS

BusinessProcesses

GlobalIntegratedForwarding Warehousing

LandTransportation AirFreightServices

OceanServices InternationalCourier

SRPC LogisticsConsultation

CustomerServiceCustomerService

Logistics Standard Audit Program L i i


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InternalAudit 28

LogisticsStandardAuditProgram Logistics

BusinessUnit/Factory

RequestforLogistics

PickupArrangement

WarehouseManagement

TransportationDelivery,PoD

SupplierInvoice

CustomerBilling

KPI,CostEfficiency

Validatetheplanningprocess BusinessUnitrequestandLogisticsplanningcommunication

Verifythestarttoendoperationalprocessflow,andinventoryownership,PIC.

Assessvendorselectionprocess, assessshipment,warehouse,customsupplierperformance

Validateandreperform planning,routing,cargoselection,loading/unloading,custom

Reviewwarehouseselection,contractrenewal,pricing,insurance

ReviewandrecalculatewarehousecostandbillingtoBusinessUnit storage,damage,

package,OT,utility

ValidatePayment/cost Warehouse/trucktracking,invoicereconciliation,reviewsampleinvoice

ValidateBilling/revenue Scheduling,storage,custom,PoD,handlingfee,sampleinvoice

Scheduling,planningbetweenbusinessunit/factory1

Dispatchmanagement Transportationpickup,delivery2

KPI,performancemeasurement,costefficiency5

Financials Tracking,billing,payment,andP&Lreporting4

Warehousemanagement Load/Unload,dailymaintenance3

ProcessandAssessmentArea KeyAuditProgram

Review,reperformKPIdetails,benchmarkwithGlobalfinishedgoodsKPI,documentation

Assesscurrentmanagementreview,involvementinoperations,driversforcostefficiency


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InternalAudit 29

CaseStudy:BPO

BPO Background BPO


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InternalAudit 30

BPO Background BPO

RISK SCOPE ServiceLevel Efficiency Compliance Information

ProcessEfficiency/Effectiveness

ContractCompliance

VendorPerformance/Monitoring

VendorEducation/Compliance

VendorControl/ProcessVisibility

BillingfromVendor/Cost

SoD /SystemAccessRight

InformationSecurity

BusinessContinuityPlanning

KEY POINT : AUDIT AGAINST CONTRACT.

Two Phases

1. Contract Design: Are key risks covered?

2. Contract Execution: Is it working as designed? Are we monitoring?

Audit Scope:


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InternalAudit

SONY or make.believe is a registered trademark and/or trademark of Sony Corporation.Names of Sony products and services are the registered trademarks and/or trademarks of Sony Corporation or its Group companies.

Other company names and product names are the registered trademarks and/or trademarks of the respective companies.

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Internal Audit Sonny