Draft A Procurement Risk Control Matrix (RCM) With ChatGPT

Drafting a Risk Control Matrix (RCM) is one of the most time-consuming tasks in the internal audit lifecycle. For the procurement cycle—notorious for high fraud risks like phantom vendors and bid-rigging—starting from a blank spreadsheet is inefficient. This workflow utilizes ChatGPT to generate a robust, regulatory-aligned RCM for Procure-to-Pay (P2P), effectively shifting your role from manual drafter to strategic reviewer.

⏱️ Time to Complete: 15 minutes | 📊 Difficulty: Intermediate | 🛠️ Tool: ChatGPT (GPT-4 recommended)

Why This Workflow Matters

Manually mapping risks to controls for a full procurement cycle can take an experienced auditor 4–6 hours. By automating the initial draft, you reduce this time to minutes while ensuring coverage of standard assertions (Completeness, Accuracy, Validity). This allows you to focus on verifying specific implementation variances rather than remembering generic control syntax.

Prerequisites

A ChatGPT account (Free is viable; GPT-4/Plus offers better logic for complex compliance).
Basic understanding of your organization's specific Procurement Policy.
Knowledge of the ERP system in use (e.g., SAP, Oracle, NetSuite) for specific control language.

Step-by-Step Guide

Step 1: Set the Audit Context and Scope

To get a high-quality output, you must prime the AI with the specific persona and regulatory environment. A generic prompt yields generic risks. We will define the scope as strict Procure-to-Pay (P2P) with a focus on fraud prevention and SOX compliance.

📋 Prompt Act as a Senior Internal Auditor with 15 years of experience in manufacturing and retail. We are conducting an audit of the Procurement (Procure-to-Pay) cycle. The environment uses SAP for PO management. Focus areas: Vendor selection, Purchase Requisitions, Purchase Orders, Goods Receipt, and Invoice Processing. Please list the top 10 most critical risks associated with this cycle, specifically focusing on fraud schemes (e.g., kickbacks, shell companies) and financial misstatements.

Step 2: Generate the Risk Control Matrix (RCM)

Once ChatGPT has confirmed the risks, use this prompt to format the output into a grid that you can directly copy into Excel. This prompt forces the AI to map specific controls to the risks identified in Step 1.

📋 Prompt Based on the risks identified above, draft a detailed Risk Control Matrix (RCM). Format this as a table with the following columns: 1. Process Step (e.g., Vendor Setup) 2. Risk Description (What can go wrong?) 3. Control Objective (What are we trying to achieve?) 4. Key Control Activity (Specific automated or manual check) 5. Control Type (Preventive/Detective) 6. Frequency (Per Transaction/Monthly/Quarterly) 7. Assertion (Completeness/Accuracy/Validity/Existence) Ensure the control activities mention 3-way matching and Segregation of Duties (SoD) where appropriate.

Step 3: Refine for Specific ERP Logic

Generic controls are useful, but adding system-specific context makes the RCM ready for fieldwork. If your organization uses SAP, Oracle, or NetSuite, ask ChatGPT to tailor the "Control Activity" column.

📋 Prompt Refine the "Key Control Activity" column in the table above. Since we use SAP, replace generic manual checks with specific SAP automated controls where possible (e.g., "duplicate invoice check in MIRO," "tolerance limits involved in the GR/IR account clearing"). If an SAP T-Code is relevant for testing this control, please add it in parentheses at the end of the control description.

Step 4: Gap Analysis

Finally, ask the AI to act as an external regulator to find holes in your matrix. This "Red Teaming" step is crucial for quality assurance.

📋 Prompt Review the RCM generated above. Identify 3 potential "Control Gaps" or missing risks that a sophisticated external auditor might flag. Suggest an additional compensatory control for each gap.

Pro Tips

Use CSV Format: If the table is too large, ask ChatGPT to "Output the table in CSV format inside a code block." You can then copy-paste it directly into Excel and select "Data > Text to Columns."
Define Materiality: If you are auditing a small subsidiary, tell ChatGPT to "Ignored low-impact risks and focus only on material risks > $50k."
Include SoD: Always explicitly ask for Segregation of Duties conflicts (e.g., "Ensure the person who creates the vendor cannot process payments").

Common Mistakes to Avoid

Copying Without Reviewing: AI controls are "best practice" but may not match your company's actual resourcing. Always verify if a control is feasible.
Ignoring Non-Financial Risks: Procurement also involves reputation and ESG risks (e.g., child labor in supply chain). Ensure you add these if relevant.
Over-reliance on Automated Controls: Do not assume the system is configured correctly. Always include a "Review of Configuration Settings" as a manual control.

Frequently Asked Questions

Q: Can ChatGPT handle specific regulations like SOX or GDPR?

A: Yes. When prompting, explicitly state "Ensure controls align with SOX Section 404 requirements" or "Include GDPR vendor data privacy controls." This directs the AI to prioritize compliance-specific language.

Q: Should I upload my company's actual data to ChatGPT?

A: No. Never upload confidential vendor lists, pricing data, or employee names. Use sanitized, hypothetical scenarios or ask for templates, then populate the sensitive data offline in your secure Excel files.

Q: How do I export the RCM from ChatGPT to Excel?

A: The most efficient method is to ask ChatGPT to "Convert the table above into CSV format." Copy the code block content, paste it into Notepad, save as a .csv file, and open it in Excel.

Automate Risk Control Matrices with ChatGPT

⚡ TL;DR

Why This Workflow Matters

Prerequisites