Lean processes without compromising controls.
Author | Raschke, Robyn L. |
In today's economic environment, governments feel the pressure to operate more efficiently, and many are therefore considering the gradual and continuous process improvement that Lean provides. Lean begins by examining a process from beginning to end, without departmental barriers; identifying the parts of the process that are inefficient; making a case for Lean improvements; and improving the process by reducing activities and waste that don't add value to the consumer of the process. For example, a city changed its purchasing process to require a purchase order only for purchases of $500 or more, instead of every purchase. After the change, smaller purchases required only a direct payment request form, which greatly simplified the process while still accounting for the money being spent--it required fewer signatures, less paperwork, and shorter lead times. (1) But while this example eliminates the costs of waiting and extra processing, it is not clear if the risks of loss--including loss caused by fraud or other intentional and unintentional acts--were addressed. Process control considerations may have taken a back seat to the quest for eliminating waste. That doesn't have to be the case, however; controls can be designed into Lean processes without compromising the effectiveness of Lean initiatives. This article provides guidance on finding the right balance between Lean and control objectives.
THE COSO FRAMEWORK
The goal of Lean is to develop processes that are both efficient (i.e., they reduce costs) and effective (i.e., they improve quality). In pursuit of this goal, participants in Lean initiatives look for sources of inefficiency and ineffectiveness, or waste, such as excess processing, motion, waiting, employees who aren't used to their full capabilities, inventory/backlog, overproduction, transportation, and defects. At the same time, public managers must also:
* Provide reasonable assurance that the objectives and scope of business processes under their responsibility are being achieved.
* Mitigate the risk that the enterprise will be exposed to some type of harm, danger, or loss.
* Provide reasonable assurance that the organization is in compliance with applicable legal and regulatory obligations.
These are the objectives issued by the Committee of Sponsoring Organizations of the Treadway Commission--known as the COSO--in 1992, and they underlie an internal control framework for organizations. (2) Taken together, Lean objectives and the COSO framework provide the right balance of efficiency, effectiveness, and minimal enterprise risk. Five interrelated elements designed to achieve the three objectives of the framework mentioned above are: 1) control environment; 2) risk assessment; 3) control activities; 4) information and communication; and...
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