Page 5 - CICT Magazine e-Version May 2021

Message from the Chief Financial Officer
Building a solid framework and firewall for CICT
If a company is compared to a building, then in lay terms,
the Internal Control System, would be the system that
would ensure that the company is safe from outsiders,
especially intruders. The safety of the people of building
would be ensured, by having a sound and secure firewall
that would restrict such intruders entering the building.
A safe and secure Internal Control System (ICS) is an
essential tool in any company, which whilst simplifying
the work flow, would also reduce the risk of fraud. ICS,
ensures that, the company business is properly supervised
and monitored, through efficient internal controls, thus
enabling the company to develop its business in a very
efficient and transparent manner. These include, financial
reporting, corporate governance, and a regulatory
environment, established through the ICS.
A safe and secure firewall launched through the ICS, not
only ensures that internal risks as aforesaid are minimized, auditing firms in the world.
but also reduces the external risks, such as the bad debt,
payment default, other types of fraud which may be
caused with or without external assistance. Hence, ICS
essentially, safeguards the company, internally as well as
externally.
Since the early 1900, accountancy writers have paid
increasing attention to internal control, particularly in
relation to the activities of auditors. This may give the
impression that the concept of internal control, as part
of business management, is a relatively new idea, and
that auditors have, only recently become concerned with
it. However, auditing and accounting are known to have
been practiced widely in developed economies, which
existed years before the birth of Christ. The first signs of bankruptcy of Barings
internal control and in particular, internal auditing can be Bank in 1995, a bank
found in the records of Mesopotamian civilization – the
Sumerian – around 3600 to 3200 B.C. , according to the
research of Williard E. Stone, who was the professor of
accounting, University of Florida.
Hence, ICS is an established fact that the requirements of
internal controls were generated with the development of
economic activities, especially the separation of the right
of management from the right of ownership.
During the period from approximately 1905 to 2004,
the definitions, meaning, and use of internal controls in
auditing as well as their impact on audit engagements have
developed and transformed. These changes were often a
reaction to a major change in the economic situation of
country as a whole or to the actions of individual firms
within the economy.
What really revolutionized the modern internal control
and risk management was issuance of Sarbanes-Oxley
Act 2002 (US) after scandal of Enron Energy (US).
Accordingly, the internal control system began to look like
the feature of today, that all circle of transaction of the
company’s business starts to be covered, the risk control
and management also has been brought into the scope of
internal control gradually.
From the above, it could easily be concluded that ICS
including risk management systems are part and parcel
of advanced management experiences, in managing the
development of global economy.
CICT has ensured that the ICS, including the risk
management systems that are in place, have been
established after having taken into consideration the
best practices that are available and in place. This, has
been achieved through considering, practices adopted
by CMPort, being a world leader in Port and Terminal
Management, combined with professional experiences,
practices and issues of various enterprises that have
been experienced by Deloitte, being one of the “Big 4”
CICT in its ambitious drive to be the leader of Sri Lankan
port industry, is facing more and more challenges as well as
risks. Hence, to overcome such challenges, it is of upmost
importance to build a solid internal control and risk
managementframework. Toachievethisend,itisimportant
that management is assisted through a
solid and secure firewall established
through the ICS, enabling CICT to face
competition successfully, and to have a
distinct advantage over its competitors.
If you are still wondering why internal
controls are required, I would
suggest you research into the
with a history more than
100 years !
I sincerely hope that
this article has provided
you with an insight as to
why ICS are required,
to understand the
existing ICS work that
we are implementing.
Hope we will in the
future, wholeheartedly,
provide support to
build a solid framework
and firewall for CICT,
in ensuring a risk free
and secure CICT.
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