3 Internal Control Deficiencies That Could Lead to Material Weaknesses in SAP
In response to the various risk and compliance regulations worldwide, independent auditors are testing for effective internal controls and holding security teams accountable for successfully managing their risk and compliance program in SAP. If these auditors find internal control deficiencies over financial reporting, it could be reported as a deficiency, significant deficiency, or a material weakness.
A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting. There is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses must be reported during the period it occurred.
With that in mind, how do you manage internal control deficiencies that could potentially lead to material weaknesses in your SAP applications? Here are three important questions to consider.
Are You Taking the Right Approach to SoD Analysis & Managing Security Violations?
Segregation of Duties (SoD) violations are typically associated with inappropriate access at the transaction workflow level. In practice, SoD divides business processes between multiple users to limit the risk of fraud and error. To avoid access risks like SoD security violations and achieve SOX compliance in SAP, check if you have the following controls in place:
- Policy-Based Access Control to improve policy enforcement capability at the SoD level.
- Identify & Access Management (IAM) solution to increase the effectiveness of the user access management lifecycle process.
- Identify Governance & Administration (IGA) solution to improve governance and oversight of all user access to detect and prevent SOD violations.
Most organizations use tedious manual user provision processes, but automated user-provisioning, de-provisioning, and access recertification processes are more effective in detecting and preventing SoD violations. Enabling an effective user-provisioning process lets organizations analyze role assignments to avoid SOD violations before authorizing the access assignments.
Are You Monitoring Key Risk Indicators to Prevent Risk Events Such as Payment Inconsistencies?
Payment inconsistencies can occur if internal control deficiencies are present within your SAP applications to prevent or detect transaction risks. There are multiple scenarios where a lack of transaction-level controls could enhance risk.
- Duplicate payments may occur because SAP may not be properly configured to detect the unique ID numbers associated with individual payments to prevent a duplicate from being created and approved.
- Excessive payment amounts can occur when the payment amount entered exceeds the actual amount required, and no independent review is required to verify the accuracy and completeness of the data input amount before the payment is finalized.
- Fraudulent payments can occur due to segregation of duty violations. This enables the user to create and approve a fake vendor and then create and approve payment to that vendor.
Organizations need sophisticated controls that strengthen access policies and enhance logging and analytics capabilities to prevent unauthorized activities that lead to fraud, theft, and error.
Are You Preventing Unauthorized Changes to Maintain Data Integrity?
Data integrity risk occurs when data stored and processed by IT systems are incomplete, inaccurate, or inconsistent across different IT systems. It is a result of weak or absent IT controls that can verify the accuracy and completeness of data inputs and appropriately restrict access to view, change, or extract the data. For example, an unauthorized change to financial data stored in SAP can negatively impact the accuracy and completeness of the organization’s financial reports (a material weakness).
Minimize Material Weakness and Stay Audit-Ready with Pathlock
Pathlock offers various solutions that enable you to enforce data security, maintain internal and external compliance, and adhere to multiple regulations. From multi-factor authentication at the login level to masking of sensitive data fields, Pathlock provides complete control over data access and exposure that goes beyond the initial access.
Our attribute-based access control considers the context of access when authenticating data access, even at the field level. Pathlock takes a layered approach to security within your SAP ecosystem to enable field-level controls that prevent, restrict, and monitor access and modification of any field data.
Schedule a demo with our SAP experts to learn how Pathlock can help you stay audit-ready without disrupting business continuity.