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Sector: Transport
Client: Transport and logistics company
Requirement: Risk Advisory
Location: Europe
Lead Partner: Oliver Bungartz

Unlocking business value through effective development

The transport and logistics industry has witnessed a decline in growth within developed countries which is threatened by increasing energy and high volatile raw material costs. Contributing issues include:

  • A shift in consumer spending and behaviours
  • Bribery, corruption and fraudulent activities
  • Over regulation and protectionist tendencies of national governments
  •  Increasing tax burden as well as some government response to fiscal deficit and debt burden
  • Availability of key skills and adequate personnel
  • Lack of stability in capital markets
  • Exchange rate volatility
  • Inadequate basic infrastructures

The effects of these issues could result in less structured corporate governance frameworks, compliance issues with regulation and supply chain risks.

Development and implementation of solutions

Work was undertaken for:

  • Identification and establishment of mitigating activities
  • Establishing formalised monitoring activities and reporting structures

The goal was the introduction and implementation of both an outsourced and co-sourced approach for the Internal Audit function as a driver for compliance with legal requirements as well as the identification of improvement potentials derived from the Internal Audit test results and consulting services provided to the client while avoiding conflicts of interest.

This was accomplished by taking into consideration the existing internal controls and risk management structures as a starting point for comprehensive compliance management.

The outcome was the successful implementation of an integrated and tailored Compliance Management System (CMS) including internal audit, internal controls and risk management with minimal impact on the operational business and low administrative expenses.

A phased approach

Development of the Internal Audit function consisted of the following phases:

  • Obtaining stakeholder expectations
  • Creating organisational framework
  • Risk Assessment (organisation wide)
  • Audit Planning / Scoping
  • Establishing formalised reporting structures
  • Conducting internal audits according to audit plan and ad-hoc requests

Evaluation and optimization of the existing Internal Control System (ICS) consisted of the following phases:

  • Identification and documentation of key processes and key risks
  • Walkthrough and documentation of processes and controls
  • Evaluation of design effectiveness
  • Testing of operational effectiveness
  • Increasing level of automatisation of the ICS
  • Establishing formalised monitoring activities and reporting structures

Evaluation and implementation of the existing Risk Management System (RMS) consisted of the following phases:

  • Identification of goals and targets
  • Creation of risk assessment and risk inventory
  • Risk rating based on impact and likelihood
  • Identification and establishment of mitigating activities
  • Establishing formalised monitoring activities and reporting structures