Jim Kaplan CIA CFE, profile picture
Uploaded byJim Kaplan CIA CFE
712 views

Forensic and investigating audit reporting

The document discusses the roles and responsibilities of auditors, particularly regarding fraud reporting and whistle-blowing. It emphasizes the importance of internal reporting versus external reporting, outlines guidelines for managing fraud risks, and details the consequences of non-reporting. Additionally, it offers insight into the implementation of organizational policies and procedures for employee discipline.

Embed presentation

Downloaded 24 times
11/6/2017 1 Forensic and Investigative Audit Reporting About Jim Kaplan, CIA, CFE  President and Founder of AuditNet®, the global resource for auditors (now available on iOS, Android and Windows devices)  Auditor, Web Site Guru,  Internet for Auditors Pioneer  Recipient of the IIA’s 2007 Bradford Cadmus Memorial Award.  Author of “The Auditor’s Guide to Internet Resources” 2nd Edition Page 2
11/6/2017 2 About Richard Cascarino, MBA, CIA, CISM, CFE, CRMA • Principal of Richard Cascarino & Associates based in Colorado USA • Over 28 years experience in IT audit training and consultancy • Past President of the Institute of Internal Auditors in South Africa • Member of ISACA • Member of Association of Certified Fraud Examiners • Author of Data Analytics for Internal Auditors 3 About AuditNet® LLC • AuditNet®, the global resource for auditors, is available on the Web, iPad, iPhone, Windows and Android devices and features: • Over 2,700 Reusable Templates, Audit Programs, Questionnaires, and Control Matrices • Training without Travel Webinars focusing on fraud, data analytics, IT audit, and internal audit • Audit guides, manuals, and books on audit basics and using audit technology • LinkedIn Networking Groups • Monthly Newsletters with Expert Guest Columnists • Surveys on timely topics for internal auditors • NASBA Approved CPE Sponsor Introductions Page 4
11/6/2017 3 Housekeeping This webinar and its material are the property of AuditNet® and its Webinar partners. Unauthorized usage or recording of this webinar or any of its material is strictly forbidden.  If you logged in with another individual’s confirmation email you will not receive CPE as the confirmation login is linked to a specific individual  This Webinar is not eligible for viewing in a group setting. You must be logged in with your unique join link.  We are recording the webinar and you will be provided access to that recording after the webinar. Downloading or otherwise duplicating the webinar recording is expressly prohibited.  If you have indicated you would like CPE you must answer the polling questions (all or minimum required) to receive CPE per NASBA.  If you meet the NASBA criteria for earning CPE you will receive a link via email to download your certificate. The official email for CPE will be issued via NoReply@gensend.io and it is important to white list this address. It is from this email that your CPE credit will be sent. There is a processing fee to have your CPE credit regenerated post event.  Submit questions via the chat box on your screen and we will answer them either during or at the conclusion.  Please complete the evaluation questionnaire to help us continuously improve our Webinars. IMPORTANT INFORMATION REGARDING CPE!  SUBSCRIBERS/SITE LICENSE USERS - If you attend the Webinar and answer the polling questions (all or minimum required) you will receive an email with the link to download your CPE certificate. The official email for CPE will be issued via NoReply@gensend.io and it is important to white list this address. It is from this email that your CPE credit will be sent. There is a processing fee to have your CPE credit regenerated post event.  NON-SUBSCRIBERS/NON-SITE LICENSE USERS - If you attend the Webinar and answer the polling questions (all or minimum required) and requested CPE you must pay a fee to receive your CPE. No exceptions!  We cannot manually generate a CPE certificate as these are handled by our 3rd party provider. We highly recommend that you work with your IT department to identify and correct any email delivery issues prior to attending the Webinar. Issues would include blocks or spam filters in your email system or a firewall that will redirect or not allow delivery of this email from Gensend.io  Anyone may register, attend and view the Webinar without fees if they opted out of receiving CPE.  We are not responsible for any connection, audio or other computer related issues. You must have pop-ups enabled on you computer otherwise you will not be able to answer the polling questions which occur approximately every 20 minutes. We suggest that if you have any pressing issues to see to that you do so immediately after a polling question.
11/6/2017 4 The views expressed by the presenters do not necessarily represent the views, positions, or opinions of AuditNet® LLC. These materials, and the oral presentation accompanying them, are for educational purposes only and do not constitute accounting or legal advice or create an accountant-client relationship. While AuditNet® makes every effort to ensure information is accurate and complete, AuditNet® makes no representations, guarantees, or warranties as to the accuracy or completeness of the information provided via this presentation. AuditNet® specifically disclaims all liability for any claims or damages that may result from the information contained in this presentation, including any websites maintained by third parties and linked to the AuditNet® website. Any mention of commercial products is for information only; it does not imply recommendation or endorsement by AuditNet® LLC Today’s Agenda  Fraud Reporting  Types of reporting  Management  Board/Audit committee  Disciplinary action  Litigation support  Criminal process  Follow up and remedial action Page 8
11/6/2017 5 Fraud Reporting and Whistle Blowing Internal Auditor "the eyes and ears of management" Reporting to legal authorities and media neither required nor encouraged by IIA Where such reporting is required by law then IIA requires compliance Code of Ethics require loyalty in all matters pertaining to the operations of the employer except where in conflict with legal issues Mandated to report wrongdoings internally as a minimum State of Virginia has laws protecting Internal Auditors from firing for whistle-blowing 9 From a US Survey of 8000 Employees Most employees believe reporting wrongdoing is ethical and morally right Most employees who observe wrongdoing do not report it to anyone Internal auditors whose job entails reporting are more likely to report wrongdoing Employees who observe serious, well-documented, or frequent wrongdoings are more likely to report it Employees who observe wrongdoings are more likely to report when their organization's policies encourage them to do so 10
11/6/2017 6 Steps in Deciding to Report  Did wrongdoing occur?  Does the wrongdoing require action?  Am I responsible for acting?  What actions are available to me?  Will the benefits of acting outweigh the costs?  Has previous action proved beneficial to all parties?  Was my action effective? 11 Reasons for Non-reporting  Not sure whom to report it to  Nothing would be done  Nothing could be done  Not enough evidence  Too risky  Not my job  Not important 12
11/6/2017 7 Reporting 13  Who makes the decision?  Under what conditions?  To whom do they report?  What are the effects on them personally?  With management's approval? Ethical Considerations of Whistle Blowing  Who is the client? Originally management (IIA Statement of Responsibility 1947) Now the organisation (IIA Statement of Responsibility 1981) As a result of the growth in audit committees 14
11/6/2017 8 IIA Code of Ethics II Members, in holding the trust of their employers, shall exhibit loyalty .... however, members shall not knowingly be a party to any illegal or improper activity V Members shall not use confidential information for personal gain nor in a manner which would be detrimental to the welfare of their employer 15 Employer - Employee Relationship  Trust  Loyalty  Internal Auditors in a privileged situation  Breach would permanently impair working relationship Loss of unrestricted access Fear and mistrust 16
11/6/2017 9 Reporting  Internal Reporting Is not whistle blowing Is not a matter of choice Part of the auditor's duty Expected by employers  External Reporting If no law is broken, there is no obligation to externalize If there is a legal requirement to report, it is not whistle blowing Non-reporting may not be, in itself a crime Conspiracy to commit, aid, conceal or abet is a crime Specific authority from employers to externalize is therefore required 17 Fraud Reporting Guidelines All frauds must be reported to employers Frauds should not be externalized unless authorized Lawful interests of employers should not be jeopardized by the audit process Consult with the company's legal representatives when unlawful activities become apparent Audit files should be protected to avoid jeopardizing the employers lawful business Internal auditors should not knowingly be a party to illegal acts Whether or not the employer agrees to take action 18
11/6/2017 10 External Auditors Leaking to external auditors probably falls under improper activities No requirement to communicate to external auditors unless explicitly or implicitly authorized by management If authorized by management, there must be no active or passive misleading If access to internal audit files only approved and no representations are made about their completeness, there is no ethical obligation to provide additional information Internal auditors must not exceed the authorized boundaries of cooperation Fundamental judgment not legal but right and wrong 19 Overriding Social Need Circumstances may eventually necessitate whistle blowing Social threats Health Safety Threat to property Conscience dictates Report as an individual not as an internal auditor May have unfortunate results for the whistle blower 20
11/6/2017 11 From a US Survey of 8000 Employees A substantial number, though not a majority, of employees who report wrongdoing suffer retaliation of some sort, particularly when the reporting is externalized Retaliation is more likely if the wrongdoing is serious Internal Auditors suffer retaliation at about the same rate as other employees, even though they are mandated to report wrongdoing 21 POLLING QUESTION
11/6/2017 12 Types of Reporting  Typical recipients of risk reports/ profiles: Board Executive Committees (Risk/Audit/Finance etc.) Risk Owners/ Line Managers Staff External (Secretariats & Departments, Public) Government Recovery Board 23 After establishing ‘Likelihood’ and ‘Consequence’ you can use a table like this to set a level of risk. Extreme Very high Moderate Low Negligible Almost certain Severe Severe High Major Moderate Likely Severe High Major Significant Moderate Moderate High Major Significant Moderate Low Unlikely Major Significant Moderate Low Very low Rare Significant Moderate Low Very low Very Low You must define what these risk levels mean to you in terms of the Risk Appetite You must define what these risk levels mean to you in terms of the Risk Appetite Board Reporting against Risk Appetite 24
11/6/2017 13 Risks facing Management Externally Driven Internally Driven Regulated Rate Decreases Power prices / Supplier of Last Resort RTO Evolution Post Merger Integration Increasing customer expectation Evolving Technology / Alternatives (e.g. micro generation) Aging System Load / Demand Forecasting System Reliability Crew Productivity Labor Contracts Weather / Storms Workers’ Comp 3rd Party System Damage Safety Vehicular Liability / Loss Terrorism Property Damage / Medical Liability Interest Rate Fluctuation Foreign Currency Exposure Value Creation from M&A Information Systems New Legislation & Regulations Enron Fall-Out Liquidity / Cash Mgt. Working Capital Mgt. Credit Rating Environmental Damage New Ventures CAPEX Over / Under Investment Major Facility Damage (fire, earthquake) Arrival of new competitors Impact of newly de-regulated markets Political risks Cost control Trading Risks Industry margin squeeze Strategic Commercial and Operational Financial Hazard Related Oil price hike PR / public support Infrastructure economics Supply base risk 25 Evaluate Fraud Risks to Risk Appetite/Tolerance Scales for Tolerance Very Low Tolerance – Management is not willing to accept more than a nominal level of fraud risk. Adverse fraud risks are intolerable whatever benefits the activity will bring and risk reduction measures are essential – whatever their cost. Moderate Tolerance – Management will accept a moderate level of fraud risk. Costs and benefits are taken into account and opportunities balanced against potential adverse consequences. Extremely High Tolerance – Management will accept an extremely high level of fraud risk. Negative fraud risks are negligible or so small that no risk treatment measures are needed. 26
11/6/2017 14 Evaluate Risks Against Risk Tolerances 27 Impact Likelihood Tolerance Analysis 1 Industry 6.6 4.0 Moderate • Industry changes would have moderate to high impact as the Company’s product may have to undergo significant changes. • Technological changes are inherent with industry, hence ABC Company’s likelihood and tolerance are both moderate 8 Brand Equity 7.4 4.0 Low • Protecting ABC Company’s brand is paramount for future growth and success; hence high impact and low tolerance. • High quality assurance and ongoing R&D result in low likelihood 12 Product Failure 7.8 3.8 Low • High quality products and performance are very important to the ABC Company; hence high impact and low tolerance. • Company’s strong quality control helps keep likelihood low (good audit candidate) 23 Legal & Regulatory 6.6 3.4 Low • Changes in legal and regulations could have a moderately high impact on the company • As these changes are infrequent, ABC Company is successful in managing these changes to low tolerance level 25 Health & Safety 6.4 3.2 Low • Considering the high value placed on employees, Company has a low tolerance to health & safety risks which could have a moderate impact • The Company has an effective health & safety program, which has helped the likelihood of this risk remain low Treat Fraud Risks 28 Accept Reduce Transfer Avoid Not CoreCore Not Manage ManageConsistentExceedsHigh Far Exceeds Choices Risk to Company Strategy Management Believes It Can Effectively Risk Impact to Company Tolerance
11/6/2017 15 POLLING QUESTION Audit Committee Reporting  Reporting on the results of Management’s annual review of the effectiveness of internal control  Provision of periodic monitoring reports on the high-level (and other significant) risks  Auditing to ensure that ‘early warning indicators’ are in place where appropriate  Following-up on management assurances on mitigating controls, further actions and residual risks 30
11/6/2017 16 Audit Committee Reporting  Ensuring that all corporate objectives are adequately mapped against risks and the audit plan  Ensuring that there is a process in place to identify new or emerging risks from an audit perspective  Challenging the acceptability and treatment of residual risks  Ensuring that ‘further actions’ identified in the risk management process are actually undertaken 31 Board /Audit Committee Reporting  Reviews of Accounting and financial internal and fraud/embezzlement related controls and processes Risk assessment and management Possible entity and individual liability and reputation risk exposure Compliance assessment and management relating to laws, regulations, and rules Page 32
11/6/2017 17 Audit Committees and Whistleblowing  The AC should review arrangements by which staff of the company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC’s objective should be to ensure that arrangements are in place for the independent investigation of such matters and for appropriate follow up action. (Revised Singapore Code, Guideline 11.7) 33 REPORT FRAUD, WASTE & ABUSE One of the core missions of the Recovery Board is to prevent fraud, waste, and mismanagement of Recovery funds. Recovery.gov gives you the ability to find Recovery projects in your own neighborhood and if you suspect fraudulent actions related to the project you can report those concerns in several ways: Submit a Complaint Form electronically Call the Recovery Board Fraud Hotline: 1-877-392-3375 (1-877-FWA-DESK) Fax the Recovery Board: 1-877-329-3922 (1-877-FAX-FWA2) Write the Recovery Board: Recovery Accountability and Transparency Board Attention: Hotline Operators P.O. Box 27545 Washington, D.C. 20038-7958 The Recovery Board is committed to helping ensure these funds are spent properly, but we cannot do it without your help. Additionally, the Recovery Act provides protections for certain individuals (whistleblowers) who make specific disclosures about uses of Recovery Act funds. Source: Recovery.gov Recovery Board
11/6/2017 18 POLLING QUESTION The Purpose of Employee Discipline  Eliminate inappropriate behavior  Create a "win-win" situation for manager and subordinates  Not to exercise vengeance or eliminate a problematic employee 36
11/6/2017 19 The Purpose of Employee Discipline  Neglecting discipline has consequences: Negative effect on productivity and morale Difficulty in enforcing long-ignored standards later on  Disciplinary Process - A step-by-step method of dealing with performance problems in employees. 37 Organizational Policy and Procedure  Policy and Procedure (P&P) A written standard used within an organization to describe what is to be done and how to do it. Usually policies and procedures are written for tasks that are done repeatedly and by more than one individual. 38
11/6/2017 20 Organizational Policy and Procedure  Importance of a written disciplinary policy and procedure Protects manager and organization Guarantees rights of employee Teaches manager how to discipline employees 39 Organizational Policy and Procedure  Components of policies and procedures Policy Statement The component of a P&P that states what is to be done. Progressive Discipline - A disciplinary process characterized by the use of more drastic penalties for each repeated instance of poor performance. 40
11/6/2017 21 Organizational Policy and Procedure – Components  Purpose Statement of Purpose - Part of a P&P that explains rationale for a policy and may include how the policy relates to an organization’s philosophy.  Scope An optional component of the policy section of a P&P that lists the individuals or groups impacted by the policy. 41 Organizational Policy and Procedure – Components  Procedure - usually has a minimum of 4 steps: Verbal warning Written warning Suspension Termination 42
11/6/2017 22 Organizational Policy and Procedure – Components  Procedure Disciplinary Action - The activity performed by a manager when implementing a step in progressive discipline in order to assist an employee to correct a behavioral or performance problem. 43 The Disciplinary Process  Verbal Warning The first step in employee discipline, which includes identification of the problem and information sharing between the manager and the employee. Manager: Meets with employee States problem that has been identified Listens to employee's perspective Discusses potential solutions with employee Ends on a positive, hopeful note 44
11/6/2017 23 The Disciplinary Process  Verbal warning If employee is unaware of a policy they are violating, they should be coached instead of disciplined Prior to a verbal warning, manager must become aware of the problem and verify it exists 45 The Disciplinary Process  Written Warning The second, more formal, step in employee discipline, which includes stating the problem and noting repetition over time. Includes: Meeting similar to verbal warning Placement of formal document in the employee's file 46
11/6/2017 24 The Disciplinary Process  Suspension The third step in the employee disciplinary process, in which the employee is given time off, usually without pay, to demonstrate the seriousness of the problem. Manager meets with employee as before, and review formal documentation of suspension. 47 The Disciplinary Process  Termination The final action in the employee disciplinary process, which leads to the end of employment and that results after repeated failure of the employee to correct the problem. 48
11/6/2017 25 The Disciplinary Process  Special circumstances Certain events such as fraud may result in termination without progressive discipline Before immediate termination, manager should consider: Magnitude of problem behavior Prior record of employee 49 POLLING QUESTION
11/6/2017 26 The Fraud Auditor in Court  Evidence collected will be disputed for three reasons:  Legality of the acquisition of the evidence  Integrity of the evidence  Interpretation of the evidence Evidentiary Considerations  Preserving and Protecting Evidence  documents – paper and electronic  physical – i.e., core sample  chain of custody/illegal search issues  Interviewing Witnesses  false imprisonment issues  self-incrimination issues  union contract issues  Maintain Confidentiality – “Need to know.”  Let the “Pros” Handle It
11/6/2017 27 Definition of Forensic Accounting Litigation Service 53 Forensic accounting litigation services are the professional assistance accountants provide related to the litigation process. These services may involve accounting, financial, auditing, tax, quantitative analysis, and investigative and research skills, as well as an understanding of the legal process to provide assistance for actual, pending, or potential legal or regulatory proceedings before a trial of fact in connection with the resolution of a dispute between parties. Definition of Forensic Accounting Litigation Service 54 “Briefly, forensic accounting is a science that deals with the relation and application of facts to business and social problems.” Lenny smiled and turned toward the jury. “As I tell my students, a forensic accountant is like the Columbo or Quincy character of yesteryear, except he uses accounting records and facts to uncover fraud, missing assets, insiders’ trading, and other white-collar crimes.” Lenny turned back to the pinstriped lawyer. I.W. Collett & M. Smith, Trap Doors and Trojan Horses, Thomas Horton & Daughters, p. 76
11/6/2017 28 Six Areas of Litigation Services 55 1. Damages  Lost profits  Lost value  Lost cash flow  Lost revenue  Extra cost  Mitigation  Personal Injury  Environmental 2. Antitrust Analysis  Price-fixing  Market share, market definition  Pricing below cost  Dumping and other price distribution  Anti-competition actions  Monopolization 3. Accounting  CPA malpractice  Bankruptcy/ reorganization  Tracing  Contract cost and claims  Regulated industries  Frauds (civil and criminal)  Historical analyses  Family law Source: Management Advisory Services Technical Consulting Practice Aid 7: Litigation Services, (AICPA, 1986); http://www.aicpa.org/innovation/fp/overview_litigat_disput.htm Six Areas of Litigation Services 56 4. Valuation  Business and professional practices  Pension  Intangibles/intelligent property  Property 5. General Consulting  Arbitration  Mediation  Actuarial analyses  Statistical analyses  Projections  Industrial engineering  Market analyses  Computer consulting  Industry practices  Merger/acquisitions  Document management 6. Analyses  Tax bases  Cost allocations  Tax treatment of specific transactions Source: Management Advisory Services Technical Consulting Practice Aid 7: Litigation Services, (AICPA, 1986); http://www.aicpa.org/innovation/fp/overview_litigat_disput.htm
11/6/2017 29 Ten Commandments of Demonstrative Evidence 57 1. Keep it Simple 2. Use Graphics with Every Witness (show & tell) 3. (memory increases 700%) 4. Improve Interest Through Variety 5. Test Your Charts with Those Unfamiliar with the Dispute 6. Use Only Properly-scaled and Labeled Color Charts 7. Use Word Charts Rarely 8. Remember the Seriousness of the Setting 9. Charts Improve the Entire Process 10. Keep Up with Technology 11. Get Help Fulcrum Inquiry, "The Ten Commandments of Demonstrative Evidence in Litigation." Ten Commandments for Depositions 58  Always tell the truth, but answer only the question asked.  Think before answering.  Never answer a question you do not understand.  Do not guess or speculate.  Do not bring notes, diagrams, books, or other written material to the deposition unless a subpoena or your attorney requires you to do so.  Listen carefully to each objection made by your lawyer.  Do not argue or become angry or hostile with the examining attorney.  Even if a question calls for a yes or no answer, ask to explain your response if you feel a qualification or explanation is required to complete your answer.  Beware of questions which involve absolutes.  Do not memorize your answers before the deposition. Source: B.P. Brinig, “The Art of Testifying,” in Handbook of Financial Planning for Divorce and Separation, John Wiley, 1990.
11/6/2017 30 POLLING QUESTION Report Follow-up and Remedial Action Page 60  Response may be to:  Accept the advice or recommendations  Auditor must follow-up to ensure promised action is taken  Reject the advice or recommendations  Auditor must ascertain that top management has assumed the risk of non-action  No further follow-up is required  Management's decision - not audit's  Can be a major cause of auditor frustration  The audit committee can help
11/6/2017 31 The Internal Audit Process  The Nine Steps  Selection of the Auditee  Audit Preparation  Preliminary Survey of Operations  Internal Control Description and Analysis  Expanded Tests of Control Systems  Develop Findings and Recommendations  Reporting  Follow-up  Audit Evaluation Remember 61 POLLING QUESTION
11/6/2017 32 Questions? Any Questions? Don’t be Shy! AuditNet® and cRisk Academy If you would like forever access to this webinar recording If you are watching the recording, and would like to obtain CPE credit for this webinar Previous AuditNet® webinars are also available on-demand for CPE credit http://criskacademy.com http://ondemand.criskacade my.com Use coupon code: 50OFF for a discount on this webinar for one week
11/6/2017 33 Thank You! Jim Kaplan AuditNet® LLC 1-800-385-1625 Email:info@auditnet.org www.auditnet.org Richard Cascarino & Associates Cell: +1 970 819 7963 - South Africa +27 (0)78 980 7685 Tel +1 303 747 6087 (Skype Worldwide) Tel: +1 970 367 5429 eMail: rcasc@rcascarino.com Web: http://www.rcascarino.com Skype: Richard.Cascarino Page 65

More Related Content

PDF
Fraud auditing creative techniques
byJim Kaplan CIA CFE
 
PDF
Right to Audit Clauses: What you need to know!
byJim Kaplan CIA CFE
 
PDF
Visualize audit sampling and fraud detection in excel
byJim Kaplan CIA CFE
 
PDF
Technology development: What is audit's role?
byJim Kaplan CIA CFE
 
PDF
How to prepare for your first anti fraud review
byJim Kaplan CIA CFE
 
PDF
Auditing Social Media
byJim Kaplan CIA CFE
 
PDF
Are You a Smart CAAT or a Copy CAAT
byJim Kaplan CIA CFE
 
PDF
How to build a data analytics strategy in a digital world
byJim Kaplan CIA CFE
 
Fraud auditing creative techniques
byJim Kaplan CIA CFE
 
Right to Audit Clauses: What you need to know!
byJim Kaplan CIA CFE
 
Visualize audit sampling and fraud detection in excel
byJim Kaplan CIA CFE
 
Technology development: What is audit's role?
byJim Kaplan CIA CFE
 
How to prepare for your first anti fraud review
byJim Kaplan CIA CFE
 
Auditing Social Media
byJim Kaplan CIA CFE
 
Are You a Smart CAAT or a Copy CAAT
byJim Kaplan CIA CFE
 
How to build a data analytics strategy in a digital world
byJim Kaplan CIA CFE
 

What's hot

PDF
Internal Auditing Basics
byJim Kaplan CIA CFE
 
PDF
Agile auditing for financial services
byJim Kaplan CIA CFE
 
PDF
How ERM and audit work together, a combined assurance approach
byJim Kaplan CIA CFE
 
PDF
Touchstone Research for Internal Audit 2020 – A Look at the Now and Tomorrow ...
byJim Kaplan CIA CFE
 
PPTX
Ethics for Internal Auditors
byJim Kaplan CIA CFE
 
PDF
What's the Difference between GRC and Combined Assurance?
byJim Kaplan CIA CFE
 
PDF
How to get auditors performing basic analytics using excel
byJim Kaplan CIA CFE
 
PDF
It62015 slides
byJim Kaplan CIA CFE
 
PPTX
Tracking down outliers
byJim Kaplan CIA CFE
 
PDF
20160210 webinarslides
byJim Kaplan CIA CFE
 
PDF
CyberSecurity Update Slides
byJim Kaplan CIA CFE
 
PDF
Top 10 excel analytic tests to minimize fraud and process risks
byJim Kaplan CIA CFE
 
PDF
mplementing and Auditing GDPR Series (10 of 10)
byJim Kaplan CIA CFE
 
PDF
Internal Audit's Role in Ethics, Governance, & Culture
byJim Kaplan CIA CFE
 
PDF
Implementing and Auditing General Data Protection Regulation
byJim Kaplan CIA CFE
 
PPTX
Implementing and Auditing GDPR Series (9 of 10)
byJim Kaplan CIA CFE
 
PDF
IT Fraud Series: Data Analytics
byJim Kaplan CIA CFE
 
PDF
Enhanced fraud detection with data analytics
byJim Kaplan CIA CFE
 
PDF
Fieldwork Webinar
byJim Kaplan CIA CFE
 
PDF
When is a Duplicate not a Duplicate? Detecting Errors and Fraud
byJim Kaplan CIA CFE
 
Internal Auditing Basics
byJim Kaplan CIA CFE
 
Agile auditing for financial services
byJim Kaplan CIA CFE
 
How ERM and audit work together, a combined assurance approach
byJim Kaplan CIA CFE
 
Touchstone Research for Internal Audit 2020 – A Look at the Now and Tomorrow ...
byJim Kaplan CIA CFE
 
Ethics for Internal Auditors
byJim Kaplan CIA CFE
 
What's the Difference between GRC and Combined Assurance?
byJim Kaplan CIA CFE
 
How to get auditors performing basic analytics using excel
byJim Kaplan CIA CFE
 
It62015 slides
byJim Kaplan CIA CFE
 
Tracking down outliers
byJim Kaplan CIA CFE
 
20160210 webinarslides
byJim Kaplan CIA CFE
 
CyberSecurity Update Slides
byJim Kaplan CIA CFE
 
Top 10 excel analytic tests to minimize fraud and process risks
byJim Kaplan CIA CFE
 
mplementing and Auditing GDPR Series (10 of 10)
byJim Kaplan CIA CFE
 
Internal Audit's Role in Ethics, Governance, & Culture
byJim Kaplan CIA CFE
 
Implementing and Auditing General Data Protection Regulation
byJim Kaplan CIA CFE
 
Implementing and Auditing GDPR Series (9 of 10)
byJim Kaplan CIA CFE
 
IT Fraud Series: Data Analytics
byJim Kaplan CIA CFE
 
Enhanced fraud detection with data analytics
byJim Kaplan CIA CFE
 
Fieldwork Webinar
byJim Kaplan CIA CFE
 
When is a Duplicate not a Duplicate? Detecting Errors and Fraud
byJim Kaplan CIA CFE
 

Similar to Forensic and investigating audit reporting

PDF
Future audit analytics
byJim Kaplan CIA CFE
 
PDF
Ethics for Internal Auditors
byJim Kaplan CIA CFE
 
PDF
The Future of Auditing and Fraud Detection
byJim Kaplan CIA CFE
 
PDF
Robotic Process Auditing
byJim Kaplan CIA CFE
 
PDF
Establishing effective communication skills for auditors slides
byJim Kaplan CIA CFE
 
PDF
How to data mine your print reports
byJim Kaplan CIA CFE
 
PDF
Ethics for internal auditors
byJim Kaplan CIA CFE
 
PDF
Embracing Multigenerational Teams in Audit
byJim Kaplan CIA CFE
 
PDF
Overcoming the Challenges of Audit Reporting in a Multinational Corporation
byJim Kaplan CIA CFE
 
PDF
Implementing and Auditing GDPR Series (8 of 10)
byJim Kaplan CIA CFE
 
PDF
IT Fraud and Countermeasures
byJim Kaplan CIA CFE
 
PDF
GDPR Series Session 4
byJim Kaplan CIA CFE
 
PDF
Is Your Audit Department Highly Effective?
byJim Kaplan CIA CFE
 
PDF
Implementing and Auditing GDPR Series (3 of 10)
byJim Kaplan CIA CFE
 
PDF
Ethics and the Internal Auditor
byJim Kaplan CIA CFE
 
PDF
Retrospective data analytics slides
byJim Kaplan CIA CFE
 
PDF
Cybersecurity Series - Cyber Defense for Internal Auditors
byJim Kaplan CIA CFE
 
PDF
Focused agile audit planning using analytics
byJim Kaplan CIA CFE
 
PDF
Anti-Fraud Professional’s Guide to Building an Anti- Fraud Culture
byFraudBusters
 
PDF
.Ethics for Auditors: Understanding Current Issues in Financial Integrity
byFraudBusters
 
Future audit analytics
byJim Kaplan CIA CFE
 
Ethics for Internal Auditors
byJim Kaplan CIA CFE
 
The Future of Auditing and Fraud Detection
byJim Kaplan CIA CFE
 
Robotic Process Auditing
byJim Kaplan CIA CFE
 
Establishing effective communication skills for auditors slides
byJim Kaplan CIA CFE
 
How to data mine your print reports
byJim Kaplan CIA CFE
 
Ethics for internal auditors
byJim Kaplan CIA CFE
 
Embracing Multigenerational Teams in Audit
byJim Kaplan CIA CFE
 
Overcoming the Challenges of Audit Reporting in a Multinational Corporation
byJim Kaplan CIA CFE
 
Implementing and Auditing GDPR Series (8 of 10)
byJim Kaplan CIA CFE
 
IT Fraud and Countermeasures
byJim Kaplan CIA CFE
 
GDPR Series Session 4
byJim Kaplan CIA CFE
 
Is Your Audit Department Highly Effective?
byJim Kaplan CIA CFE
 
Implementing and Auditing GDPR Series (3 of 10)
byJim Kaplan CIA CFE
 
Ethics and the Internal Auditor
byJim Kaplan CIA CFE
 
Retrospective data analytics slides
byJim Kaplan CIA CFE
 
Cybersecurity Series - Cyber Defense for Internal Auditors
byJim Kaplan CIA CFE
 
Focused agile audit planning using analytics
byJim Kaplan CIA CFE
 
Anti-Fraud Professional’s Guide to Building an Anti- Fraud Culture
byFraudBusters
 
.Ethics for Auditors: Understanding Current Issues in Financial Integrity
byFraudBusters
 

More from Jim Kaplan CIA CFE

PDF
How analytics should be used in controls testing instead of sampling
byJim Kaplan CIA CFE
 
PDF
How to use ai apps to unleash the power of your audit program
byJim Kaplan CIA CFE
 
PDF
How to detect fraud like a pro detective slides
byJim Kaplan CIA CFE
 
PDF
Cybersecurity update 12
byJim Kaplan CIA CFE
 
PDF
Cybersecurity Slides
byJim Kaplan CIA CFE
 
PDF
General Data Protection Regulation Webinar 6
byJim Kaplan CIA CFE
 
PDF
How analytics should be used in controls testing instead of sampling
byJim Kaplan CIA CFE
 
PDF
General Data Protection Regulation for Auditors 5 of 10
byJim Kaplan CIA CFE
 
PDF
Implementing and Auditing GDPR Series (2 of 10)
byJim Kaplan CIA CFE
 
PDF
Implementing and Auditing General Data Protection Regulation
byJim Kaplan CIA CFE
 
PDF
Driving More Value With Automated Analytics
byJim Kaplan CIA CFE
 
PDF
Building and Striving for Data Analytics Excellence
byJim Kaplan CIA CFE
 
How analytics should be used in controls testing instead of sampling
byJim Kaplan CIA CFE
 
How to use ai apps to unleash the power of your audit program
byJim Kaplan CIA CFE
 
How to detect fraud like a pro detective slides
byJim Kaplan CIA CFE
 
Cybersecurity update 12
byJim Kaplan CIA CFE
 
Cybersecurity Slides
byJim Kaplan CIA CFE
 
General Data Protection Regulation Webinar 6
byJim Kaplan CIA CFE
 
How analytics should be used in controls testing instead of sampling
byJim Kaplan CIA CFE
 
General Data Protection Regulation for Auditors 5 of 10
byJim Kaplan CIA CFE
 
Implementing and Auditing GDPR Series (2 of 10)
byJim Kaplan CIA CFE
 
Implementing and Auditing General Data Protection Regulation
byJim Kaplan CIA CFE
 
Driving More Value With Automated Analytics
byJim Kaplan CIA CFE
 
Building and Striving for Data Analytics Excellence
byJim Kaplan CIA CFE
 

Recently uploaded

PDF
Where to Buy Verified Cash App Accounts for Long-term ... (1).pdf
byh55oga0kd25m12iaza2
 
PDF
How to Buy Aged Facebook Accounts in 2026.pdf
byh55oga0kd25m12iaza2
 
PDF
Buying Snapchat Accounts in 2026 first year.pdf
byh55oga0kd25m12iaza2
 
DOCX
17 Best Platforms to Buy Verified Cash App Accounts in Bulk .docx
byWWW.USAALLHUB.COM
 
PDF
_How to Safely Buy Instagram Accounts in 2025.pdf
byzze2jltsflran03jy3m
 
PDF
Buy Verified Western Union Accounts - in the United States.pdf
bykeb2bq5cegc6m2xa32ay
 
PDF
Buy Verified Google Ads Accounts to Maximize #ROI and Launch High-Impact #PPC...
byusasmmpva3211
 
PDF
Dark Side of Hosting_ Why People Buy Verified Airbnb Accounts
byUsaviral Wave
 
PDF
Abdallah Dahhan: Harnessing Risk as a Compass for Resilient Innovation
bybmmseo25
 
DOCX
5 Simple Steps to Purchase Telegram Accounts For Best Service Topusapro.docx
bytopusapro.com
 
PDF
Unlock the Power of Leadership: The Electrolux Manufacturing System (EMS) Way
byKaiNexus
 
PDF
J Hamilton - Pensions UK V1 27.11.2025 (1).pdf
byHenry Tapper
 
PDF
How to Buy Snapchat Account( 9.7) A Step-by-Step Guide ....pdf
byndsfcm3nubx18jc4s6f4
 
PDF
PS_DB Report_Back to the Future.pdf Punter Southall
byHenry Tapper
 
PDF
LCP-Pension-Submisson-CDC-Superfund-December-2025.pdf
byHenry Tapper
 
DOCX
Best Place To Purchase Verified OnlyFans Accounts.docx
bymarketing
 
PDF
Kelli Molczyk - A Seasoned Brand Strategist
byKelli Molczyk
 
PDF
Updated-costings-on-changes-to-PPF-compensation-levels---with-31-March-2025-f...
byHenry Tapper
 
PPTX
Con Keating's slides from Pension PlayPen budget comments
byHenry Tapper
 
PDF
Myocardial Infarction- MI for Nursing Students.pdf
byhttps://www.facebook.com/profile.php?id=61578457231735
 
Where to Buy Verified Cash App Accounts for Long-term ... (1).pdf
byh55oga0kd25m12iaza2
 
How to Buy Aged Facebook Accounts in 2026.pdf
byh55oga0kd25m12iaza2
 
Buying Snapchat Accounts in 2026 first year.pdf
byh55oga0kd25m12iaza2
 
17 Best Platforms to Buy Verified Cash App Accounts in Bulk .docx
byWWW.USAALLHUB.COM
 
_How to Safely Buy Instagram Accounts in 2025.pdf
byzze2jltsflran03jy3m
 
Buy Verified Western Union Accounts - in the United States.pdf
bykeb2bq5cegc6m2xa32ay
 
Buy Verified Google Ads Accounts to Maximize #ROI and Launch High-Impact #PPC...
byusasmmpva3211
 
Dark Side of Hosting_ Why People Buy Verified Airbnb Accounts
byUsaviral Wave
 
Abdallah Dahhan: Harnessing Risk as a Compass for Resilient Innovation
bybmmseo25
 
5 Simple Steps to Purchase Telegram Accounts For Best Service Topusapro.docx
bytopusapro.com
 
Unlock the Power of Leadership: The Electrolux Manufacturing System (EMS) Way
byKaiNexus
 
J Hamilton - Pensions UK V1 27.11.2025 (1).pdf
byHenry Tapper
 
How to Buy Snapchat Account( 9.7) A Step-by-Step Guide ....pdf
byndsfcm3nubx18jc4s6f4
 
PS_DB Report_Back to the Future.pdf Punter Southall
byHenry Tapper
 
LCP-Pension-Submisson-CDC-Superfund-December-2025.pdf
byHenry Tapper
 
Best Place To Purchase Verified OnlyFans Accounts.docx
bymarketing
 
Kelli Molczyk - A Seasoned Brand Strategist
byKelli Molczyk
 
Updated-costings-on-changes-to-PPF-compensation-levels---with-31-March-2025-f...
byHenry Tapper
 
Con Keating's slides from Pension PlayPen budget comments
byHenry Tapper
 
Myocardial Infarction- MI for Nursing Students.pdf
byhttps://www.facebook.com/profile.php?id=61578457231735
 

Forensic and investigating audit reporting

  • 1.
    11/6/2017 1 Forensic and Investigative AuditReporting About Jim Kaplan, CIA, CFE  President and Founder of AuditNet®, the global resource for auditors (now available on iOS, Android and Windows devices)  Auditor, Web Site Guru,  Internet for Auditors Pioneer  Recipient of the IIA’s 2007 Bradford Cadmus Memorial Award.  Author of “The Auditor’s Guide to Internet Resources” 2nd Edition Page 2
  • 2.
    11/6/2017 2 About Richard Cascarino,MBA, CIA, CISM, CFE, CRMA • Principal of Richard Cascarino & Associates based in Colorado USA • Over 28 years experience in IT audit training and consultancy • Past President of the Institute of Internal Auditors in South Africa • Member of ISACA • Member of Association of Certified Fraud Examiners • Author of Data Analytics for Internal Auditors 3 About AuditNet® LLC • AuditNet®, the global resource for auditors, is available on the Web, iPad, iPhone, Windows and Android devices and features: • Over 2,700 Reusable Templates, Audit Programs, Questionnaires, and Control Matrices • Training without Travel Webinars focusing on fraud, data analytics, IT audit, and internal audit • Audit guides, manuals, and books on audit basics and using audit technology • LinkedIn Networking Groups • Monthly Newsletters with Expert Guest Columnists • Surveys on timely topics for internal auditors • NASBA Approved CPE Sponsor Introductions Page 4
  • 3.
    11/6/2017 3 Housekeeping This webinar andits material are the property of AuditNet® and its Webinar partners. Unauthorized usage or recording of this webinar or any of its material is strictly forbidden.  If you logged in with another individual’s confirmation email you will not receive CPE as the confirmation login is linked to a specific individual  This Webinar is not eligible for viewing in a group setting. You must be logged in with your unique join link.  We are recording the webinar and you will be provided access to that recording after the webinar. Downloading or otherwise duplicating the webinar recording is expressly prohibited.  If you have indicated you would like CPE you must answer the polling questions (all or minimum required) to receive CPE per NASBA.  If you meet the NASBA criteria for earning CPE you will receive a link via email to download your certificate. The official email for CPE will be issued via NoReply@gensend.io and it is important to white list this address. It is from this email that your CPE credit will be sent. There is a processing fee to have your CPE credit regenerated post event.  Submit questions via the chat box on your screen and we will answer them either during or at the conclusion.  Please complete the evaluation questionnaire to help us continuously improve our Webinars. IMPORTANT INFORMATION REGARDING CPE!  SUBSCRIBERS/SITE LICENSE USERS - If you attend the Webinar and answer the polling questions (all or minimum required) you will receive an email with the link to download your CPE certificate. The official email for CPE will be issued via NoReply@gensend.io and it is important to white list this address. It is from this email that your CPE credit will be sent. There is a processing fee to have your CPE credit regenerated post event.  NON-SUBSCRIBERS/NON-SITE LICENSE USERS - If you attend the Webinar and answer the polling questions (all or minimum required) and requested CPE you must pay a fee to receive your CPE. No exceptions!  We cannot manually generate a CPE certificate as these are handled by our 3rd party provider. We highly recommend that you work with your IT department to identify and correct any email delivery issues prior to attending the Webinar. Issues would include blocks or spam filters in your email system or a firewall that will redirect or not allow delivery of this email from Gensend.io  Anyone may register, attend and view the Webinar without fees if they opted out of receiving CPE.  We are not responsible for any connection, audio or other computer related issues. You must have pop-ups enabled on you computer otherwise you will not be able to answer the polling questions which occur approximately every 20 minutes. We suggest that if you have any pressing issues to see to that you do so immediately after a polling question.
  • 4.
    11/6/2017 4 The views expressedby the presenters do not necessarily represent the views, positions, or opinions of AuditNet® LLC. These materials, and the oral presentation accompanying them, are for educational purposes only and do not constitute accounting or legal advice or create an accountant-client relationship. While AuditNet® makes every effort to ensure information is accurate and complete, AuditNet® makes no representations, guarantees, or warranties as to the accuracy or completeness of the information provided via this presentation. AuditNet® specifically disclaims all liability for any claims or damages that may result from the information contained in this presentation, including any websites maintained by third parties and linked to the AuditNet® website. Any mention of commercial products is for information only; it does not imply recommendation or endorsement by AuditNet® LLC Today’s Agenda  Fraud Reporting  Types of reporting  Management  Board/Audit committee  Disciplinary action  Litigation support  Criminal process  Follow up and remedial action Page 8
  • 5.
    11/6/2017 5 Fraud Reporting and WhistleBlowing Internal Auditor "the eyes and ears of management" Reporting to legal authorities and media neither required nor encouraged by IIA Where such reporting is required by law then IIA requires compliance Code of Ethics require loyalty in all matters pertaining to the operations of the employer except where in conflict with legal issues Mandated to report wrongdoings internally as a minimum State of Virginia has laws protecting Internal Auditors from firing for whistle-blowing 9 From a US Survey of 8000 Employees Most employees believe reporting wrongdoing is ethical and morally right Most employees who observe wrongdoing do not report it to anyone Internal auditors whose job entails reporting are more likely to report wrongdoing Employees who observe serious, well-documented, or frequent wrongdoings are more likely to report it Employees who observe wrongdoings are more likely to report when their organization's policies encourage them to do so 10
  • 6.
    11/6/2017 6 Steps in Decidingto Report  Did wrongdoing occur?  Does the wrongdoing require action?  Am I responsible for acting?  What actions are available to me?  Will the benefits of acting outweigh the costs?  Has previous action proved beneficial to all parties?  Was my action effective? 11 Reasons for Non-reporting  Not sure whom to report it to  Nothing would be done  Nothing could be done  Not enough evidence  Too risky  Not my job  Not important 12
  • 7.
    11/6/2017 7 Reporting 13  Who makesthe decision?  Under what conditions?  To whom do they report?  What are the effects on them personally?  With management's approval? Ethical Considerations of Whistle Blowing  Who is the client? Originally management (IIA Statement of Responsibility 1947) Now the organisation (IIA Statement of Responsibility 1981) As a result of the growth in audit committees 14
  • 8.
    11/6/2017 8 IIA Code ofEthics II Members, in holding the trust of their employers, shall exhibit loyalty .... however, members shall not knowingly be a party to any illegal or improper activity V Members shall not use confidential information for personal gain nor in a manner which would be detrimental to the welfare of their employer 15 Employer - Employee Relationship  Trust  Loyalty  Internal Auditors in a privileged situation  Breach would permanently impair working relationship Loss of unrestricted access Fear and mistrust 16
  • 9.
    11/6/2017 9 Reporting  Internal Reporting Isnot whistle blowing Is not a matter of choice Part of the auditor's duty Expected by employers  External Reporting If no law is broken, there is no obligation to externalize If there is a legal requirement to report, it is not whistle blowing Non-reporting may not be, in itself a crime Conspiracy to commit, aid, conceal or abet is a crime Specific authority from employers to externalize is therefore required 17 Fraud Reporting Guidelines All frauds must be reported to employers Frauds should not be externalized unless authorized Lawful interests of employers should not be jeopardized by the audit process Consult with the company's legal representatives when unlawful activities become apparent Audit files should be protected to avoid jeopardizing the employers lawful business Internal auditors should not knowingly be a party to illegal acts Whether or not the employer agrees to take action 18
  • 10.
    11/6/2017 10 External Auditors Leaking toexternal auditors probably falls under improper activities No requirement to communicate to external auditors unless explicitly or implicitly authorized by management If authorized by management, there must be no active or passive misleading If access to internal audit files only approved and no representations are made about their completeness, there is no ethical obligation to provide additional information Internal auditors must not exceed the authorized boundaries of cooperation Fundamental judgment not legal but right and wrong 19 Overriding Social Need Circumstances may eventually necessitate whistle blowing Social threats Health Safety Threat to property Conscience dictates Report as an individual not as an internal auditor May have unfortunate results for the whistle blower 20
  • 11.
    11/6/2017 11 From a USSurvey of 8000 Employees A substantial number, though not a majority, of employees who report wrongdoing suffer retaliation of some sort, particularly when the reporting is externalized Retaliation is more likely if the wrongdoing is serious Internal Auditors suffer retaliation at about the same rate as other employees, even though they are mandated to report wrongdoing 21 POLLING QUESTION
  • 12.
    11/6/2017 12 Types of Reporting Typical recipients of risk reports/ profiles: Board Executive Committees (Risk/Audit/Finance etc.) Risk Owners/ Line Managers Staff External (Secretariats & Departments, Public) Government Recovery Board 23 After establishing ‘Likelihood’ and ‘Consequence’ you can use a table like this to set a level of risk. Extreme Very high Moderate Low Negligible Almost certain Severe Severe High Major Moderate Likely Severe High Major Significant Moderate Moderate High Major Significant Moderate Low Unlikely Major Significant Moderate Low Very low Rare Significant Moderate Low Very low Very Low You must define what these risk levels mean to you in terms of the Risk Appetite You must define what these risk levels mean to you in terms of the Risk Appetite Board Reporting against Risk Appetite 24
  • 13.
    11/6/2017 13 Risks facing Management ExternallyDriven Internally Driven Regulated Rate Decreases Power prices / Supplier of Last Resort RTO Evolution Post Merger Integration Increasing customer expectation Evolving Technology / Alternatives (e.g. micro generation) Aging System Load / Demand Forecasting System Reliability Crew Productivity Labor Contracts Weather / Storms Workers’ Comp 3rd Party System Damage Safety Vehicular Liability / Loss Terrorism Property Damage / Medical Liability Interest Rate Fluctuation Foreign Currency Exposure Value Creation from M&A Information Systems New Legislation & Regulations Enron Fall-Out Liquidity / Cash Mgt. Working Capital Mgt. Credit Rating Environmental Damage New Ventures CAPEX Over / Under Investment Major Facility Damage (fire, earthquake) Arrival of new competitors Impact of newly de-regulated markets Political risks Cost control Trading Risks Industry margin squeeze Strategic Commercial and Operational Financial Hazard Related Oil price hike PR / public support Infrastructure economics Supply base risk 25 Evaluate Fraud Risks to Risk Appetite/Tolerance Scales for Tolerance Very Low Tolerance – Management is not willing to accept more than a nominal level of fraud risk. Adverse fraud risks are intolerable whatever benefits the activity will bring and risk reduction measures are essential – whatever their cost. Moderate Tolerance – Management will accept a moderate level of fraud risk. Costs and benefits are taken into account and opportunities balanced against potential adverse consequences. Extremely High Tolerance – Management will accept an extremely high level of fraud risk. Negative fraud risks are negligible or so small that no risk treatment measures are needed. 26
  • 14.
    11/6/2017 14 Evaluate Risks Against RiskTolerances 27 Impact Likelihood Tolerance Analysis 1 Industry 6.6 4.0 Moderate • Industry changes would have moderate to high impact as the Company’s product may have to undergo significant changes. • Technological changes are inherent with industry, hence ABC Company’s likelihood and tolerance are both moderate 8 Brand Equity 7.4 4.0 Low • Protecting ABC Company’s brand is paramount for future growth and success; hence high impact and low tolerance. • High quality assurance and ongoing R&D result in low likelihood 12 Product Failure 7.8 3.8 Low • High quality products and performance are very important to the ABC Company; hence high impact and low tolerance. • Company’s strong quality control helps keep likelihood low (good audit candidate) 23 Legal & Regulatory 6.6 3.4 Low • Changes in legal and regulations could have a moderately high impact on the company • As these changes are infrequent, ABC Company is successful in managing these changes to low tolerance level 25 Health & Safety 6.4 3.2 Low • Considering the high value placed on employees, Company has a low tolerance to health & safety risks which could have a moderate impact • The Company has an effective health & safety program, which has helped the likelihood of this risk remain low Treat Fraud Risks 28 Accept Reduce Transfer Avoid Not CoreCore Not Manage ManageConsistentExceedsHigh Far Exceeds Choices Risk to Company Strategy Management Believes It Can Effectively Risk Impact to Company Tolerance
  • 15.
    11/6/2017 15 POLLING QUESTION Audit CommitteeReporting  Reporting on the results of Management’s annual review of the effectiveness of internal control  Provision of periodic monitoring reports on the high-level (and other significant) risks  Auditing to ensure that ‘early warning indicators’ are in place where appropriate  Following-up on management assurances on mitigating controls, further actions and residual risks 30
  • 16.
    11/6/2017 16 Audit Committee Reporting Ensuring that all corporate objectives are adequately mapped against risks and the audit plan  Ensuring that there is a process in place to identify new or emerging risks from an audit perspective  Challenging the acceptability and treatment of residual risks  Ensuring that ‘further actions’ identified in the risk management process are actually undertaken 31 Board /Audit Committee Reporting  Reviews of Accounting and financial internal and fraud/embezzlement related controls and processes Risk assessment and management Possible entity and individual liability and reputation risk exposure Compliance assessment and management relating to laws, regulations, and rules Page 32
  • 17.
    11/6/2017 17 Audit Committees and Whistleblowing The AC should review arrangements by which staff of the company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC’s objective should be to ensure that arrangements are in place for the independent investigation of such matters and for appropriate follow up action. (Revised Singapore Code, Guideline 11.7) 33 REPORT FRAUD, WASTE & ABUSE One of the core missions of the Recovery Board is to prevent fraud, waste, and mismanagement of Recovery funds. Recovery.gov gives you the ability to find Recovery projects in your own neighborhood and if you suspect fraudulent actions related to the project you can report those concerns in several ways: Submit a Complaint Form electronically Call the Recovery Board Fraud Hotline: 1-877-392-3375 (1-877-FWA-DESK) Fax the Recovery Board: 1-877-329-3922 (1-877-FAX-FWA2) Write the Recovery Board: Recovery Accountability and Transparency Board Attention: Hotline Operators P.O. Box 27545 Washington, D.C. 20038-7958 The Recovery Board is committed to helping ensure these funds are spent properly, but we cannot do it without your help. Additionally, the Recovery Act provides protections for certain individuals (whistleblowers) who make specific disclosures about uses of Recovery Act funds. Source: Recovery.gov Recovery Board
  • 18.
    11/6/2017 18 POLLING QUESTION The Purposeof Employee Discipline  Eliminate inappropriate behavior  Create a "win-win" situation for manager and subordinates  Not to exercise vengeance or eliminate a problematic employee 36
  • 19.
    11/6/2017 19 The Purpose ofEmployee Discipline  Neglecting discipline has consequences: Negative effect on productivity and morale Difficulty in enforcing long-ignored standards later on  Disciplinary Process - A step-by-step method of dealing with performance problems in employees. 37 Organizational Policy and Procedure  Policy and Procedure (P&P) A written standard used within an organization to describe what is to be done and how to do it. Usually policies and procedures are written for tasks that are done repeatedly and by more than one individual. 38
  • 20.
    11/6/2017 20 Organizational Policy and Procedure Importance of a written disciplinary policy and procedure Protects manager and organization Guarantees rights of employee Teaches manager how to discipline employees 39 Organizational Policy and Procedure  Components of policies and procedures Policy Statement The component of a P&P that states what is to be done. Progressive Discipline - A disciplinary process characterized by the use of more drastic penalties for each repeated instance of poor performance. 40
  • 21.
    11/6/2017 21 Organizational Policy and Procedure– Components  Purpose Statement of Purpose - Part of a P&P that explains rationale for a policy and may include how the policy relates to an organization’s philosophy.  Scope An optional component of the policy section of a P&P that lists the individuals or groups impacted by the policy. 41 Organizational Policy and Procedure – Components  Procedure - usually has a minimum of 4 steps: Verbal warning Written warning Suspension Termination 42
  • 22.
    11/6/2017 22 Organizational Policy and Procedure– Components  Procedure Disciplinary Action - The activity performed by a manager when implementing a step in progressive discipline in order to assist an employee to correct a behavioral or performance problem. 43 The Disciplinary Process  Verbal Warning The first step in employee discipline, which includes identification of the problem and information sharing between the manager and the employee. Manager: Meets with employee States problem that has been identified Listens to employee's perspective Discusses potential solutions with employee Ends on a positive, hopeful note 44
  • 23.
    11/6/2017 23 The Disciplinary Process Verbal warning If employee is unaware of a policy they are violating, they should be coached instead of disciplined Prior to a verbal warning, manager must become aware of the problem and verify it exists 45 The Disciplinary Process  Written Warning The second, more formal, step in employee discipline, which includes stating the problem and noting repetition over time. Includes: Meeting similar to verbal warning Placement of formal document in the employee's file 46
  • 24.
    11/6/2017 24 The Disciplinary Process Suspension The third step in the employee disciplinary process, in which the employee is given time off, usually without pay, to demonstrate the seriousness of the problem. Manager meets with employee as before, and review formal documentation of suspension. 47 The Disciplinary Process  Termination The final action in the employee disciplinary process, which leads to the end of employment and that results after repeated failure of the employee to correct the problem. 48
  • 25.
    11/6/2017 25 The Disciplinary Process Special circumstances Certain events such as fraud may result in termination without progressive discipline Before immediate termination, manager should consider: Magnitude of problem behavior Prior record of employee 49 POLLING QUESTION
  • 26.
    11/6/2017 26 The Fraud Auditorin Court  Evidence collected will be disputed for three reasons:  Legality of the acquisition of the evidence  Integrity of the evidence  Interpretation of the evidence Evidentiary Considerations  Preserving and Protecting Evidence  documents – paper and electronic  physical – i.e., core sample  chain of custody/illegal search issues  Interviewing Witnesses  false imprisonment issues  self-incrimination issues  union contract issues  Maintain Confidentiality – “Need to know.”  Let the “Pros” Handle It
  • 27.
    11/6/2017 27 Definition of Forensic AccountingLitigation Service 53 Forensic accounting litigation services are the professional assistance accountants provide related to the litigation process. These services may involve accounting, financial, auditing, tax, quantitative analysis, and investigative and research skills, as well as an understanding of the legal process to provide assistance for actual, pending, or potential legal or regulatory proceedings before a trial of fact in connection with the resolution of a dispute between parties. Definition of Forensic Accounting Litigation Service 54 “Briefly, forensic accounting is a science that deals with the relation and application of facts to business and social problems.” Lenny smiled and turned toward the jury. “As I tell my students, a forensic accountant is like the Columbo or Quincy character of yesteryear, except he uses accounting records and facts to uncover fraud, missing assets, insiders’ trading, and other white-collar crimes.” Lenny turned back to the pinstriped lawyer. I.W. Collett & M. Smith, Trap Doors and Trojan Horses, Thomas Horton & Daughters, p. 76
  • 28.
    11/6/2017 28 Six Areas ofLitigation Services 55 1. Damages  Lost profits  Lost value  Lost cash flow  Lost revenue  Extra cost  Mitigation  Personal Injury  Environmental 2. Antitrust Analysis  Price-fixing  Market share, market definition  Pricing below cost  Dumping and other price distribution  Anti-competition actions  Monopolization 3. Accounting  CPA malpractice  Bankruptcy/ reorganization  Tracing  Contract cost and claims  Regulated industries  Frauds (civil and criminal)  Historical analyses  Family law Source: Management Advisory Services Technical Consulting Practice Aid 7: Litigation Services, (AICPA, 1986); http://www.aicpa.org/innovation/fp/overview_litigat_disput.htm Six Areas of Litigation Services 56 4. Valuation  Business and professional practices  Pension  Intangibles/intelligent property  Property 5. General Consulting  Arbitration  Mediation  Actuarial analyses  Statistical analyses  Projections  Industrial engineering  Market analyses  Computer consulting  Industry practices  Merger/acquisitions  Document management 6. Analyses  Tax bases  Cost allocations  Tax treatment of specific transactions Source: Management Advisory Services Technical Consulting Practice Aid 7: Litigation Services, (AICPA, 1986); http://www.aicpa.org/innovation/fp/overview_litigat_disput.htm
  • 29.
    11/6/2017 29 Ten Commandments ofDemonstrative Evidence 57 1. Keep it Simple 2. Use Graphics with Every Witness (show & tell) 3. (memory increases 700%) 4. Improve Interest Through Variety 5. Test Your Charts with Those Unfamiliar with the Dispute 6. Use Only Properly-scaled and Labeled Color Charts 7. Use Word Charts Rarely 8. Remember the Seriousness of the Setting 9. Charts Improve the Entire Process 10. Keep Up with Technology 11. Get Help Fulcrum Inquiry, "The Ten Commandments of Demonstrative Evidence in Litigation." Ten Commandments for Depositions 58  Always tell the truth, but answer only the question asked.  Think before answering.  Never answer a question you do not understand.  Do not guess or speculate.  Do not bring notes, diagrams, books, or other written material to the deposition unless a subpoena or your attorney requires you to do so.  Listen carefully to each objection made by your lawyer.  Do not argue or become angry or hostile with the examining attorney.  Even if a question calls for a yes or no answer, ask to explain your response if you feel a qualification or explanation is required to complete your answer.  Beware of questions which involve absolutes.  Do not memorize your answers before the deposition. Source: B.P. Brinig, “The Art of Testifying,” in Handbook of Financial Planning for Divorce and Separation, John Wiley, 1990.
  • 30.
    11/6/2017 30 POLLING QUESTION Report Follow-upand Remedial Action Page 60  Response may be to:  Accept the advice or recommendations  Auditor must follow-up to ensure promised action is taken  Reject the advice or recommendations  Auditor must ascertain that top management has assumed the risk of non-action  No further follow-up is required  Management's decision - not audit's  Can be a major cause of auditor frustration  The audit committee can help
  • 31.
    11/6/2017 31 The Internal AuditProcess  The Nine Steps  Selection of the Auditee  Audit Preparation  Preliminary Survey of Operations  Internal Control Description and Analysis  Expanded Tests of Control Systems  Develop Findings and Recommendations  Reporting  Follow-up  Audit Evaluation Remember 61 POLLING QUESTION
  • 32.
    11/6/2017 32 Questions? Any Questions? Don’t beShy! AuditNet® and cRisk Academy If you would like forever access to this webinar recording If you are watching the recording, and would like to obtain CPE credit for this webinar Previous AuditNet® webinars are also available on-demand for CPE credit http://criskacademy.com http://ondemand.criskacade my.com Use coupon code: 50OFF for a discount on this webinar for one week
  • 33.
    11/6/2017 33 Thank You! Jim Kaplan AuditNet®LLC 1-800-385-1625 Email:info@auditnet.org www.auditnet.org Richard Cascarino & Associates Cell: +1 970 819 7963 - South Africa +27 (0)78 980 7685 Tel +1 303 747 6087 (Skype Worldwide) Tel: +1 970 367 5429 eMail: rcasc@rcascarino.com Web: http://www.rcascarino.com Skype: Richard.Cascarino Page 65