Product-specific Q&A

1. What is included in the Internal Controls Tool?

2. Is the Tool software?

3. Who should use this Tool?

4. Does it work for initial documentation or ongoing testing?

5. What is the initial cost? Are there any additional costs?

6. Can multiple people use the product concurrently?

7. Can I share your templates?

8. What framework is the product based on?

9. How does the Tool address the different stages of compliance?

10. How does testing work?

11. What if we fail a test?

12. How do I buy the Tool?

13. What if I need help?

Tool Requirements Q&A

14. What do I need to install the Tool?

15. How do I install the Tool?

16. What if I need the Tool in a hurry?

17. What if I need additional help?

18. Tool Updates and Ongoing Support?

Non-Profit SOX 404 Jump Start and Service Q&A

19. What does the Non-Profit Jump Start Edition include?

20. How do I get Started with the Jump Start Edition?

21. How do I buy the Jump Start Edition and Service?

22. How do I get Consulting Help for and use of this Tool?

23. What do I need to do once I receive the Tool?

Product-specific Q&A:

1. What is included in the Internal Controls Tool?

The Internal Controls Tool includes a set of linked Word & Excel templates and software to reduce manual effort. The planning and documentation sections are primarily Word files. The testing and remediation sections are predominately Excel files.

The Excel components have buttons that create files and risks based on your selections. You first enter organization/entity information and detail the systems and processes relevant to your organization. You then use buttons to create customized files for each system where you define the risks and controls relevant to that system.

Under each system process, you define and evaluate risks and controls. Each risk and control will require testing and we provide buttons to create statistically valid testing samples based on the evaluated risk.

In following years, you use the same templates and update the testing as required.

We also provide related Tools including the FDICIA Tool and the SOX 404 Tool for differing markets. See the Tool Comparison page for more details.

2. Is the Tool software?

The Excel components contain embedded code, which automates certain features. So, yes, it is software. We call this a Tool because it includes template files that you use in your documentation as it relates to management’s controls attestation. You use industry-standard Microsoft® Excel and Word tools that you already know and use every day.

3. Who should use this Tool?

While our product was originally designed for use in Sarbanes-Oxley 404 compliance, we developed this product for those entities not required to comply with 404. We understand that a number of other entities need to document and test their internal controls. This Tool was designed especially for government agencies, private companies and non-profits. This product will also work well for subsidiaries of public companies that are responsible for documenting their own compliance.

Our Tool includes Word Templates and Excel workbooks that automate much of the manual process and incorporates best practices.

4. Does it work for initial documentation or ongoing testing?

Both. We don’t think you should have to buy one system for the first year and another system for future years. Unlike other Internal Control products, this product is intended to meet key requirements for both initial and ongoing internal control documenation and testing. This product does more than simply document your controls, it helps evaluate and test them (see item 9).

Once you configure the templates to fit your organization, you only need to change settings as your circumstances change. The initial setup effort is leveraged for future year’s internal control work. Once you have completed the first year, you simply copy the entire directory of files already customized for your organization into a new directory for the next year.

5. What is the initial cost? Are there any additional costs?

The base product is $1,799 (US Dollars). You may purchase by online payment with PayPal, FAX us a completed order form and we bill you or simply send us an order form with a check and we will send the CD to you after receipt.

The license is per Company or legal entity. CPA and consulting firms or other companies that wish to use our products for their customers will need to contact our sales team for more details. There is a $299 per year ongoing maintenance cost to cover the support contract and software product updates. Ongoing technical support services are covered under the provided support contract. This contract provides you with a support account and contact and support will be provided per incident as covered under the terms of the agreement.

Postal Mail delivery is $39.95 for shipping and handling (non-refundable) for CD orders. Additionally, California shipments will require the addition of 8.75% for sales tax for CD shipments.

If you need to return the CD version of the Tool (unopened and returned within 30 days from delivery), you can return the package for a refund of the product less a 10% restocking fee (credit given in form of payment). If you have opened the CD case, we regret that we cannot accept returns.

Customers in Canada and Europe will require special shipping and handling considerations. Please contact us and we will provide details. We're sorry but international orders from other nations can only be accepted on a case-by-case basis. Please contact sales@procognis.com if you are outside of the United States and wish to order our product and we will work out the shipping and customs details.

6. Can multiple people use the product concurrently?

Yes. Not only can multiple people work concurrently, we advise it. Internal Controls compliance is a big project and one of the ways you can keep costs down is by spreading the work out to your accounting or internal audit staff. Initially, one person should configure the product to describe your systems, processes, risks and controls. This includes assessing the control environment and setting an overall testing level. With the push of a button, an Excel workbook with embedded software is created from a template for each system you define.

We would then recommend assigning the different systems (individual Excel workbooks) to various team members. Team members should work from a common or shared directory but other arrangements will also work (see product documentation).

7. Can I share your templates?

No. Our templates are proprietary. By purchasing the Tool, you have been granted a license to use them for one entity. If you have multiple subsidiaries or related entities, each must purchase a separate license.

8. What framework is the product based on?

The product is based on the COSO framework.

COSO is the industry-standard internal control framework (COSO is an abbreviation for Committee of Sponsoring Organizations of the Treadway Commission, seriously!). Among other things, the framework defines internal control as a process designated to provide reasonable assurance regarding the reliability of financial reporting. With COSO, the control environment serves as a foundation for structuring internal financial controls. Within the control environment, management assesses risk (risk-based system) and implements mitigating control activities. Information is captured and communicated and the entire system is “monitored” (i.e. tested) for effectiveness.

9. How does the Tool address the different stages of compliance?

Our product has four major stages: Planning, Documenting, Testing, and Evaluating.

Planning
The planning stage is designed to help you put together a plan that may be given to your auditors and management (or other oversight body). It is a roadmap to compliance that addresses timing, staffing, COSO framework implementation, testing level, the control environment and the identification of significant systems. The Tool includes template documents that provide the necessary structure and allow customization to fit your organization.

Documentation
The documentation stage guides you through documenting each of the systems identified in the planning stage. Just as for Planning, templates are provided that cover the needed structure and allow customization.

Testing
The testing phase helps you to identify and evaluate risks. Those risks require mitigating controls, which must be tested to determine if they are effective. This phase also includes remediation of any deficiencies identified. Our Excel components have tools that differentiate testing level for more significant risks and create test selections that are statistically significant.

Evaluation
The evaluating phase includes analysis of any un-mitigated risks and helps the user come to a conclusion as to the overall effectiveness of their internal control structure.

10. How does testing work?

Our system is risk based. Once a risk has been identified, it is scored as to how likely it is to occur and its significance to the entity if it did occur. This produces a risk score. The user identifies what control mitigates the identified risk and designs the test plan. The sample size is determined based on the risk score and entity-wide testing level. The user then enters the beginning and ending numbers for the population. This could be invoices generated, checks cut, months in a year, or anything you can quantify numerically. Once this has been identified, the push of a button creates a statistically valid list of selections to test.

11. What if we fail a test?

Most organizations are expected to have some deficiencies, especially during the first year. All deficiencies should be corrected and re-tested if time permits. Re-testing is performed by remediation provided via a separate test sheet. If time runs out, you will need to evaluate if the remaining deficiencies rise to the level of a material weakness. Deficiencies in areas of high risk should be addressed first.

Our system defines three classes of deficiencies: deficiency, significant deficiency and material weakness. Deficiencies/Material weaknesses are determined based on risk score and evaluation of testing.

12. How do I buy the Tool?

The product can be purchased from our website at www.procognis.com/ic.php. It can be purchased by credit card or you can print and mail an order form with check. You may purchase the Internal Controls, FDICIA or Sarbanes-Oxley 404 Tools with the order form. Please see the Tool Comparison page for side-by-side comparisons of the available tools.

If you would like more information, see our Product Demo for our 404 Tool. This demo walks you through the compliance process using our software via screen-shots and verbal descriptions. The key tasks for Internal Controls testing and evaluation are comparable to SOX 404 compliance.

13. What if I need help?

Technical support is available via email on a per-incident basis. If encounter technical issues, simply email us at support@procognis.com. We will make every effort to resolve your technical or usage issues.

If you need extra help in getting the templates customized for your entity, we also offer consulting services. Contact us at info@procognis.com for more information.

Tool Requirements Q&A

14. What do I need to Install the Tool?

You will need Microsoft (R) Office XP (2002 or later) with the Word and Excel programs installed . The Tool uses Word and Excel files so the these programs must be available to use the Tool. The Operating system you use must be supported by Office XP (all recent Windows operating systems, see the Microsoft Office website for more information).

The product uses Visual Basic scripts to perform automation task so you must enable Visual Basic scripts (instructions provided with the Tool on how to enable scripting). The Tool also requires about 200MB of disk space to allow for file storage and new file creation for each year of compliance.

In addition, if you order the CD you will need a CD drive.

15. How do I install the Tool?

The CD version is installed by copying the product directory into a directory you have permissions to create files. Instructions are provided with the CD.

16. What if I need the Tool in a hurry?

We can provide a Rush delivery service for the CD version if you are in a hurry. If you select Rush delivery service, we will ship the package using a next-day delivery option as soon as your order has been received and processed. We will make every effort to ship your package as soon as possible with or without rush delivery.

17. What if I need additional help?

Our consulting division can provide customized templates based upon your Public filings (companies filing publicly via EDGAR) and customer interaction. We provide this service for $2495 (USD) which includes the license fee and consulting services. If you are interested, please contact our consulting division via email at consulting@procognis.com

18. Tool Upgrades and Ongoing Support?

The Internal Controls Tool is sold for $1,799 per license and includes a contract covering ongoing maintenance, support and software upgrades/updates. This support agreement will be provided for the first year under the purchase price and we will bill $299 to your company annually in following years for support services and upgrades. The Jump Start edition (below) adds up to three hours annually of email assistence.

The support contract provided with the packge details the terms and how support requests will be handled. Upgrades and/or updates to the Internal Controls Tool base will be provided by download free-of-charge to customers covered under this plan.

Existing customers of our Internal Controls Tool (purchased prior to July 1, 2007) can also purchase the support package receive the same benefits. These customers will simply need to pay the first year's contract fee and agree to the terms.

Non-Profit 404 Jump Start and Service Q&A

19. What does the Non-Profit SOX 404 Jump Start Edition include?

The Jump Start Edition includes the following key items to save you implementation time:

• Planning Section: draft planning section filled out with information relevant to most companies based on best practices. Since we are not onsite and have not made custom changes for your company, you will of course need to review and edit this content before you begin your compliance project to ensure that all aspects of your company are covered.
• Preliminary assessment of Control Environment: Using the most commonly encountered considerations, an initial assessment of the control environment is created and can be adjusted to meet specific requirements. Recommendations are made for testing level. You will then review our suggestions and make any required changes when you start using the Tool.
• Identification of Major Systems: using our extensive experience from a number of non-profits and common industry practice, the significant financial systems found at the majority of non-profits are listed from the start. You will need to confirm that these systems fit your entity but generally all or most pre-filled systems will be found in all entities although sometimes by other names (e.g. Disbursements, Payroll, etc.). You would then create any additional systems that apply to your company but are not included in the standard set.

The Jump Start Edition is intended to save you time but you are ultimately responsible to ensure that the settings and documentation you use in your compliance effort accurately matches your entity. The service is intended to jump-start you into the compliance process and we strive to fill in as much information as possible. But the final details and testing along with the appropriate review can only be performed onsite.

20. How do I get Started with the Jump Start Edition?

You first purchase the Non-Profit SOX 404 Jump Start Edition and complete, sign and mail the downloaded service contract to the address provided. After we receive this signed contract, we will ship the CD package to you (please allow 2-3 weeks for shipping).

When you receive the CD package, you will copy the directory structure and files to your chosen drive (following the provided instructions). You will then edit the Templates to customize them for your company (including entity name, address, etc.) and review the systems and planning documentation, adding any that may be specific to your entity. After you have reviewed and accepted the system list, you will review each system and assign risk scores to each risk identified under each step (most system have about seven or so steps). This risk scoring and assessment includes evaluation and review of the controls.

After this review and edits for company particulars is complete, you then copy the customized and edited Templates for this compliance year and start your testing and remediation, if needed for any failed tests, leading to the final report on compliance. The enclosed documentation provides this information and additional details.

21. How do I buy the Jump Start Edition and Service?

The Non-Profit SOX 404 Jump Start Edition costs $3499 (USD) plus $39.95 shipping and handling and consists of the Consulting Service and the Product Tool. Payment can be by PayPal or invoice. California sales will need to pay Sales Tax at 8.75% (CD delivery). To begin, simply send us an order form with a check and we will send the CD to you after we receive the complete and signed the consulting agreement (please allow 2-3 weeks for delivery).

The license is per entity. Once you have purchased the Tool and the sign the consulting agreement, you own the license for it. Ongoing technical support services and updates are included with the annual maintenance package (the annual package is $599 per year and includes 3 hours of consulting help by email annually).

After delivery, returns will only be accepted on unopened packages within 10 days of receipt, less shipping and handling. We're sorry but returns will not be accepted if the CD package has been opened.

22. How do I get Consulting Help for SOX 404 and use of this Tool?

After payment and the signed consulting agreement has been received, you will receive the CD package and a special email address for up to three hours of consulting time per year (continued annually under the maintenance package, invoiced on or about the purchase anniversary date).

Email to this address will be reviewed and we will provide assistance up to three hours per annual period. Additional time is available at $150/hour and is billed under the consulting agreement terms.

23. What do I need to do once I receive the Tool?

You will copy the files from the CD onto a working drive. The CD will have a customized quick start guide that you can follow to get started using the Tool for your compliance project. The guide will walk you through the initial phases of compliance and use of the Tool with the Jump Start templates.