Managing one successful company is hard enough. Overseeing more than 15 companies in six different lines of business – each with its own unique operations, challenges, employees and culture – is a whole order of magnitude more complicated.
That’s the reality Seattle-based Saltchuk faces everyday.
Since 1982, the family-owned business has grown into a recognized, 7,500 employee, $2.5 billion group of companies providing cargo transportation services, including commercial shipping by sea, land and air, as well as vital petroleum distribution. There have been growing pains, of course – among them, concerns that the lack of transparent reporting from the many self-contained, self-governed companies might cause financial misstatements. Not wanting to assume this risk, Saltchuk executives decided to do something about it.
First, they established an internal audit department to increase company-wide visibility and establish financial reporting controls. As a private company, Saltchuk is not required to comply with the Sarbanes-Oxley Act (SOX), but leadership rightly predicted that meeting the SOX standards is a good way to provide a “method to the madness.” Next, Saltchuk needed outside expertise and a software platform to empower internal auditors. That’s when Saltchuk executives asked Protiviti to step in and assist. “Following an extensive vetting process, we narrowed the selection to two finalists and ultimately chose Protiviti’s Governance Portal,” says Scott Mitchell, Director of Internal Audit at Saltchuk. “It had all the functionality we needed, and because the Governance Portal is a cloud-based solution, it’s easy on our budget.”
From there, Saltchuk worked with Protiviti experts to configure the system with a comprehensive risk control spreadsheet for each business unit. Using an Excel utility to upload all the risks at once, the system quickly went live, allowing the audit team to immediately begin work on its first risk assessment questionnaire.
“The Governance Portal enabled us to establish and test our controls, document process flows, conduct financial reporting assessments and communicate our results more effectively to management and our external auditor,” Mitchell explains.
As the organization continued to grow, the Governance Portal helped Saltchuk harmonize efforts across boundary lines and time zones. “We recently purchased Tropical Shipping, which is located in Florida,” says Mitchell. “Because the Governance Portal is web-based, we can enforce consistency no matter where our stakeholders are located.”
Today, the audit team is made up of six employees — three in Washington and three in Florida. Approximately 175 users access the system to respond to risk assessments, review documentation and perform control validation tests within Protiviti’s IT infrastructure.
“With such a complex financial structure, having these controls in place is essential to effective operations and accountability,” adds Mitchell. “The flexibility of the Governance Portal even allows us to have one group evaluate another’s controls to ensure greater objectivity.”
In addition, the Assessment Management Engine (AME) included in the Governance Portal dramatically simplifies the conduction of risk assessments and collection and reporting of survey results. It also plays nicely with Saltchuk’s seven enterprise resource planning (ERP) systems and 20 financial systems. “It was essential to address internal controls within IT,” says Mitchell. “We use the AME to validate all our processes and applications.”
The Governance Portal platform enables Saltchuk’s external auditor to review system risks and points of focus on an annual basis. “The Governance Portal gives us a place to document our risks and controls, and each year we can simply print out our controls for each system, mapped to identified risks,” adds Mitchell. “This saves us a tremendous amount of time and ensures accurate communication. In addition, some of our operating companies certify with the International Organization for Standardization (ISO) in various areas. To simplify the certification process, we are planning to map our Governance Portal controls to ISO standards.”
Protiviti’s Governance Portal has been such a success for Saltchuk that the company plans to expand its use to legal and compliance controls in the near future, and to capitalize on its scheduling and real-time reporting capabilities. “Because of the complexity of our conglomerated businesses, our attorneys want to ensure compliance with all applicable laws and regulations,” says Mitchell. “Simply put, the Governance Portal makes this a straightforward process.”