Vendor Workflows – PART 2 – Vendor Bank Account Changes

VENDOR WORKFLOWS – PART 2 – VENDOR BANK ACCOUNT CHANGES

This article series explains how to use vendor workflows in Dynamics 365 Finance and Operations within the context of SOX (Sarbanes-Oxley Act) compliance. Specifically, it aims to educate the audience on the SOX requirement for tracking changes in critical vendor master data, including vendor and vendor bank account information, to ensure the integrity and accuracy of financial records.

The series is divided into two parts as follows:

PART 1 - Vendor changes

PART 2 - Vendor’s bank account creation/changes

You can read the PART 1 - Vendor changes here. Let's get started with PART 2 - Vendor bank account changes.

CONTENT Importance of vendor workflows for SOX Compliance Vendor workflow types in D365FO Comprehensive workflow demo for vendor bank account changes Conclusion

IMPORTANCE OF VENDOR WORKFLOWS FOR SOX COMPLIANCE

Ensuring SOX compliance requires strict tracking and approval processes for any changes in critical vendor master data. 

SOX (Sarbanes-Oxley) compliance requires vendor master data change tracking to ensure the integrity, accuracy, and reliability of financial reporting. Here are the key reasons why this is essential:

1. Accuracy of Financial Records: Vendor master data includes critical information such as vendor names, addresses, payment terms, and banking details. Accurate vendor data is crucial for maintaining correct financial records, which directly impact financial statements and reporting.

2. Prevention of Fraud: Change tracking helps in detecting unauthorized or fraudulent changes to vendor data. For example, unauthorized modifications to payment details can lead to fraudulent payments, which can significantly impact the company's financial integrity.

3. Internal Controls and Audits: SOX emphasizes strong internal controls over financial reporting. Tracking changes to vendor master data ensures that any modifications are logged, audited, and reviewed. This enables the identification of irregularities and ensures that only authorized personnel make changes.

4. Compliance with Legal and Regulatory Requirements: SOX compliance requires companies to maintain accurate records and provide evidence of internal controls over financial processes. Change tracking of vendor data provides an audit trail that can be reviewed by internal and external auditors to ensure compliance.

5. Risk Management: By tracking changes to vendor data, companies can identify potential risks early. For instance, if there are frequent or unusual changes to vendor information, it may indicate potential issues that need to be addressed to mitigate risk.

6. Transparency and Accountability: Change tracking promotes transparency and accountability within the organization. Employees are aware that any changes they make to vendor data are recorded and can be traced back to them, which encourages responsible behavior and adherence to policies.

Overall, vendor master data change tracking is a vital component of SOX compliance, helping to ensure that financial data is accurate, secure, and reliable, thereby supporting the overall objective of enhancing corporate governance and protecting investors.

VENDOR WORKFLOW TYPES IN D365FO

When specific form fields are updated, the system generates a change proposal. The user then submits this through the workflow. Upon approval, the changes are automatically applied, requiring no additional action.

Workflows are triggered only when users update certain fields. In other words, workflows are not triggered by any type of update but only when one of the predefined field values is changed. Therefore, the fields subject to the approval process are limited as below.

Vendor’s Bank Account Creation/Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor bank account approval fast tab.

• Activate vendor Bank account approval on creation. (Optional)
• Activate vendor Bank account approval on update. (Optional)
• Activate vendor Bank account approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Note: Actual workflow configuration is not part of this article series. 

You can see a fully configured and activated vendor bank account changes workflow below.

Vendor Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor approval fast tab

• Activate vendor approval process.
• Activate vendor approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Note: Vendor won’t be subject to approval process on creation.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Note: Vendor changes workflow has been detailed in PART 1.

COMPREHENSIVE WORKFLOW DEMO FOR VENDOR BANK ACCOUNT CREATION/CHANGES

Prerequisites: Make sure that vendor bank account creation/changes workflow parameters are active, and fields are selected on AP parameters.

Select a vendor and go to selected vendor's Set up field group >> Click on Bank accounts.

Start creating a new bank account for the vendor.

Note that system automatically indicates that workflow approval won’t be a useful feature until a new bank account for the vendor is created.

Note that bank account fields that will trigger the approval process has additional labels as "(requires  approval)".

Submit the workflow.

Note that created bank account will not useable until it's approved.

If you are one of the approvers, go to Home page and review Work items assigned to me. 

Click on Vendor bank accounts: Review.

Review pending approvals.

Click on hyperlink of approval ID in order to see the original document to be approved.

Next action is to approve the workflow. 

Click on Workflow >> Approve.

When the workflow approval process is completed, bank account's review status becomes Approved.

Making a Change On The Existing Bank Account

When vendor parameters indicate that selected fields are subject to the approval process on updates, making a change to at least one of these selected bank account fields triggers a new workflow. 

Let's change account number from 0701244 to 0804123.

System immediately captures this change and notifies the user. Click on Close.

Submit the workflow again.

Note that Review status is now Approved, changes not submitted. That means that 

• bank account was initially approved 
• but then a change was made 
• but workflow hasn't been submitted yet.

Review status becomes Approved, pending changes upon workflow submission.

Next step is to approve workflow. If you are one of the approvers, you will see pending approval task on your Home page as below.

Click on the desired workflow item's ID hyperlink.

System will show you the document that is subject to approval.

Click on Proposed changes to see requested changes. 

Review the changes, approve the workflow.

Vendor bank account's status becomes Approved upon the completion of workflow approval process. 

Updated bank account is now ready to be used again. In other words, vendor's bank account look up now shows updated bank account information.

Conclusion

Implementing vendor workflows in Dynamics 365 Finance and Operations is critical for ensuring SOX (Sarbanes-Oxley Act) compliance, focusing on tracking changes in vendor master data and bank account information. These workflows enhance the accuracy and integrity of financial records, prevent fraudulent activities, and maintain strong internal controls. By automating the approval process for vendor changes and bank account updates, organizations can ensure regulatory compliance, promote transparency, and mitigate risks. This approach strengthens corporate governance and protects the reliability of financial reporting, thereby safeguarding investors' interests.

Vendor Workflows – PART 1 – Vendor Changes

VENDOR WORKFLOWS – PART 1 – VENDOR CHANGES

This article series explains how to use vendor workflows in Dynamics 365 Finance and Operations within the context of SOX (Sarbanes-Oxley Act) compliance. Specifically, it aims to educate the audience on the SOX requirement for tracking changes in critical vendor master data, including vendor and vendor bank account information, to ensure the integrity and accuracy of financial records.

The series is divided into two parts as follows:

PART 1 - Vendor changes

PART 2 - Vendor’s bank account creation/changes

Let's get started with PART 1 - Vendor changes.

CONTENT Importance of vendor workflows for SOX Compliance Vendor workflow types in D365FO Comprehensive workflow demo for vendor changes Conclusion

IMPORTANCE OF VENDOR WORKFLOWS FOR SOX COMPLIANCE

Ensuring SOX compliance requires strict tracking and approval processes for any changes in critical vendor master data. 

SOX (Sarbanes-Oxley) compliance requires vendor master data change tracking to ensure the integrity, accuracy, and reliability of financial reporting. Here are the key reasons why this is essential:

1. Accuracy of Financial Records: Vendor master data includes critical information such as vendor names, addresses, payment terms, and banking details. Accurate vendor data is crucial for maintaining correct financial records, which directly impact financial statements and reporting.

2. Prevention of Fraud: Change tracking helps in detecting unauthorized or fraudulent changes to vendor data. For example, unauthorized modifications to payment details can lead to fraudulent payments, which can significantly impact the company's financial integrity.

3. Internal Controls and Audits: SOX emphasizes strong internal controls over financial reporting. Tracking changes to vendor master data ensures that any modifications are logged, audited, and reviewed. This enables the identification of irregularities and ensures that only authorized personnel make changes.

4. Compliance with Legal and Regulatory Requirements: SOX compliance requires companies to maintain accurate records and provide evidence of internal controls over financial processes. Change tracking of vendor data provides an audit trail that can be reviewed by internal and external auditors to ensure compliance.

5. Risk Management: By tracking changes to vendor data, companies can identify potential risks early. For instance, if there are frequent or unusual changes to vendor information, it may indicate potential issues that need to be addressed to mitigate risk.

6. Transparency and Accountability: Change tracking promotes transparency and accountability within the organization. Employees are aware that any changes they make to vendor data are recorded and can be traced back to them, which encourages responsible behavior and adherence to policies.

Overall, vendor master data change tracking is a vital component of SOX compliance, helping to ensure that financial data is accurate, secure, and reliable, thereby supporting the overall objective of enhancing corporate governance and protecting investors.

VENDOR WORKFLOW TYPES IN D365FO

When specific form fields are updated, the system generates a change proposal. The user then submits this through the workflow. Upon approval, the changes are automatically applied, requiring no additional action.

Workflows are triggered only when users update certain fields. In other words, workflows are not triggered by any type of update but only when one of the predefined field values is changed. Therefore, the fields subject to the approval process are limited as below.

Vendor’s Bank Account Creation/Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor bank account approval fast tab.

• Activate vendor Bank account approval on creation. (Optional)
• Activate vendor Bank account approval on update. (Optional)
• Activate vendor Bank account approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Vendor bank account workflow will be detailed in the PART 2.

Vendor Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor approval fast tab

• Activate vendor approval process.
• Activate vendor approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Note: Vendor won’t be subject to approval process on creation.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Note: Actual workflow configuration is not part of this article series. 

You can see a fully configured and activated vendor changes workflow below.

COMPREHENSIVE WORKFLOW DEMO FOR VENDOR CHANGES

Prerequisites: Make sure that vendor changes workflow parameter is active, and fields are selected on AP parameters.

Create a new vendor.

Note that system automatically indicates that workflow approval won’t be a useful feature until a new vendor is created.

Note that vendor is created without approval requirement. There is no Proposed changes button at the top of the screen.

Let’s update Method of payment. This field is subject to approval based on the AP parameters setup.

Note that system triggers a proposed change.

You have 2 options:

Option 1: Discard the changes one by one or discard all of them.

Option 2: Close the screen and submit the workflow.

We'll go with Option 2.

Click on Workflow and Submit.

System notifies you that workflow has been submitted.

Another alternative submission way is to use “Submit proposed vendor changes” form.

Click OK.

This method submits all pending proposed vendor changes to workflow.

The next step is to approve vendor’s method of payment change.

Go to Work items assigned to me form via home page as shown below.

Select the record and click on Open.

Click on Proposed changes and review the requested changes.

Close the Proposed changes form.

Click on Workflow >> Approve.

Note that final approval automatically updates the field value(s).

Conclusion

In conclusion, the implementation of vendor workflows in Dynamics 365 Finance and Operations is crucial for ensuring SOX compliance. By automating and tracking changes to critical vendor master data, organizations can enhance the accuracy of financial records, prevent fraud, and maintain robust internal controls. This process not only supports regulatory compliance but also promotes transparency, accountability, and effective risk management. Adopting these workflows is an essential step in strengthening corporate governance and protecting the integrity of financial reporting. 

We will continue with the approval workflow for Vendor’s bank account creation/changes in PART 2.