RECENT POSTS
Wednesday, October 9, 2019
U.S. firms with Sales in China through 2018.

Wednesday, October 9, 2019
Tracking  Pension Data in Calcbench

Friday, October 4, 2019
In Depth: Leasing Costs in Retail Sector

Thursday, September 19, 2019
Alibaba and Cloud Computing

Monday, September 16, 2019
Introducing Critical Audit Matters

Wednesday, September 11, 2019
Our Fireside Chat on Goodwill Assets

Friday, September 6, 2019
Pulling Forward Share Buybacks

Saturday, August 31, 2019
A Quick Catch-Up on VMWare

Friday, August 23, 2019
By the Numbers: Restructuring Costs Over Time

Wednesday, August 21, 2019
WeWork Liabilities, Part II

Tuesday, August 20, 2019
WeWork’s Liabilities in Perspective

Wednesday, August 14, 2019
Comparing LinkedIn, Twitter Revenue

Wednesday, August 7, 2019
Leasing’s Effect on Retail Balance Sheets

Thursday, August 1, 2019
Using Calcbench to Find China Exposure

Tuesday, July 30, 2019
Leasing Details: The Comcast Example

Monday, July 29, 2019
Easy Fundamental Equity Analysis in Python

Monday, July 22, 2019
Calcbench Data and Tax Reform Insight

Wednesday, July 17, 2019
Downshifting in the Trucking World

Tuesday, July 16, 2019
New Report: Adoption of New Lease Accounting Standard

Friday, July 5, 2019
More Consequences of Lease Accounting

Archive  |  Search:
Now Showing: Controls & Procedures
Friday, December 28, 2018

Calcbench has another feature we’re happy to offer to subscribers at our professional level: a quick, easy way to find companies that have changed their financial controls and procedures lately, and to see what those changes were. Here’s how it works.

First, go to our Multi-Company database page and select the group of companies you want to study. As always, you can use one of our pre-selected groups (the S&P 500, the Dow Jones Industrial Average), or build a peer group of your own.

Then start typing “Controls and Procedures” in the Find Standardized Metrics field on the left side of the page. Select that choice, and a list of every firm that reported a change will appear. See Figure 1, below.



You might also notice the Trace feature on the right side of each entry. Click on that trace, and you’ll see the actual disclosure the company reported. For example, if you trace ADM’s disclosure about changed to controls, you get this:

The Company is implementing a new enterprise resource planning (ERP) system on a worldwide basis as part of its ongoing business transformation program, which is expected to improve the efficiency and effectiveness of certain financial and business transaction processes. The implementation is expected to occur in phases over the next several years. The Company has currently implemented changes to certain processes in corporate finance, two processing businesses, and in over 200 locations, and will continue to roll-out the ERP system over the next several years. The Company has appropriately considered these changes in its design of and testing for effectiveness of internal controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, that the implementation of the new ERP in these circumstances has not materially affected its internal control over financial reporting.

More interesting are the companies that disclose a material weakness or “not maintain” flag. That generally is a sign of serious trouble in financial reporting. For example, Cognizant Technology Corp. disclosed a material weakness, and that traces back to this discussion:

10-Q for the third quarter of 2017, we disclosed a material weakness in our internal control over financial reporting as we did not maintain an effective internal control environment. Specifically, we did not maintain an effective tone at the top as certain members of senior management may have participated in or been aware of the making of potentially improper payments and failed to take action to prevent the making of potentially improper payments by either overriding or failing to enforce the controls established by the Company relating to real estate and procurement principally in connection with permits for certain facilities in India.

This relates to possible bribery of foreign government officials, which is a violation of the Foreign Corrupt Practices Act and a big no-no in the eyes of the Justice Department. Cognizant disclosed that investigation in 2016 (along with the departure of its then-president), and the above item just confirms that, yep, its accounting procedures still need of some reconstructive surgery.

Again, to be clear: this feature is available only to subscribers at our professional level. We have two tiers of subscription, professional and premium; plus a free basic service. You can visit our subscription page to see what features each category of service gets, and of course if have questions about your own subscription you can always email us at us@calcbench.com.

Most companies report effective internal controls most of the time, so you won’t see lots of these flags cropping up. That said, changes in controls and procedures can be a big deal, so when they do arise in a company you’re following, it’s worth a closer look. Calcbench just wants to give you a simple, fast way to do that.


FREE Calcbench Premium
Two Week Trial

Research Financial & Accounting Data Like Never Before. More features and try our Excel add-in. Sign up now to try the Premium Suite.