It’s a safe assumption that most U.S. executives associate flowchart documentation with Sarbanes-Oxley Act (SOX) compliance efforts. Flowcharting—with supporting narrative detail—is likely the most efficient tool in a top-down, risk-based review of internal controls (financial and IT). However, management should use caution in limiting flowchart activity to a financial regulatory compliance tool. Examples in which flowcharting could increase understanding and/or efficiencies of processes include:
- Nonfinancial Process Evaluation – Risk analysis complexity isn’t limited to financial processes. Flowcharting could assist complex, nonfinancial process evaluations, such as:
- Inventory movement analysis (goods receipt through finished good shipment) supporting the development/implementation of a new cycle count program
- Statutory requirements associated with lottery annuity prize assignments from the initial winner to a second party
- Regulatory compliance requirements for election results validation
- Training Enhancement – Training needs vary vastly by organization and/or situation, e.g., new hires, acquisition and/or mergers, new software implementation, etc. Flowcharting provides an easy-to-understand methodology for rapidly increasing the understanding of basic processes.
- Guidance Documentation Development – Although the terms “policy” and “procedure” are often used interchangeably, these descriptions make a distinction:
- Policy – A defined course or method of action to assist with decisions or operating within the framework of corporate objectives, goals and management directives
- Procedure – Assurance of consistency via an established order of actions
Flowcharting can help identify key steps within a process that require development of specific action guidance, i.e., policy/procedure documentation.
Implementing a process flowcharting program does require an initial investment, i.e., flowcharting skill set development. However, increases in process efficiencies and understanding more than offset the costs.