LICR Implements New Internal Control System
As an international organization conducting laboratory and clinical science, LICR operates under a number of regulatory and financial regimes. The LICR Board of Directors and Administration review regularly the policies and procedures to ensure compliance with the evolving requirements of the various statutory bodies that oversee the Institute’s operations.
Recent revisions in the Swiss Code of Obligations have necessitated the development of a new Internal Control System (ICS) for LICR and the LICR Fund, which oversees the Institute’s endowment. Internal control can be described as the process effected by LICR’s Board of Directors, management and other personnel to provide reasonable assurance regarding the achievement of objectives in: reliability of financial reporting; compliance with applicable laws and regulations; effectiveness and efficiency of operations, and; safeguarding of resources and assets.
According to Mr. Ed McDermott, LICR President and Senior Executive Officer, the ICS is an important tool for identifying and managing risks of non-compliance with its regulatory and financial requirements and of financial reporting errors. “The initiative being spearheaded by the Zurich Office and supported by PWC (LICR’s consultants) has as its objective, the documentation and enhancement, where appropriate, of the Institute's internal control systems. The project is a priority and deserves the thoughtful attention of those asked to participate and contribute."
The ICS Guidelines, which define this important process, have been approved by LICR Management and went into effect on September 1st, 2007. The implementation of the guidelines affects primarily the Branch and Office administrators.
In creating the ICS, LICR chose to build a risk-based system that relies on the use of controls incorporated into key processes (see table) to prevent or detect high-level risks. Once developed, controls will be standardized across the Branches and Offices. A guiding principle of LICR Administration efforts is to enact internal controls that are of high standard but that are also highly efficient and have specific requirements for their execution, documentation and monitoring of performance.
Implementation of the ICS will be a two phase process. Phase 1 will involve the initiation of the “Human Resources and Payroll” and “Purchasing to Payment” pilot projects, with design and training running from September to November 2007, and implementation to be finished by April 2008. Phase 2 will be rolled out from December 2007 to September 2008, and will include: “Fund Investments,” “Financial Reporting (before audit),” “Reporting and disclosures (audit and after),” “External Funding Management (income),” “Intellectual Property Management,” and General IT and Applications (focus Finance).” These phases will begin with workshops involving key administrative personnel from the Branches and Offices who will perform risk assessments for each of the critical processes and will define the necessary controls by process.
As the new ICS becomes fully implemented, its operation will involve a dynamic, on-going evaluation of the process, maintenance of risk assessment, and continued improvement and enhancement of the tools utilized.
Following the pilot workshops, a training course will be held for each process to explain the process and controls to the relevant parties. The provisional schedule for the workshops is:
| Key Process | Provisional Dates | Location |
|---|---|---|
| Fund Investment | December 10-14, 2007 | New York Office |
| External Funding | March 10-14, 2008 | New York Office |
| General IT | March 10-14, 2008 | New York Office |
| Reporting & Disclosures | April 14-18, 2008 | New York Office |
| Intellectual Property | April 14-18, 2008 | New York Office |
| Financial Reporting | May 26-30, 2008 | Zurich Office |