How to Audit Compliance in the Financial Services Industry: A Primer

By Carol Beaumier, Protiviti Managing Director

Anyone who has been involved in compliance management for the financial services industry over the last decade or more has seen expectations regarding the role and responsibilities of the Compliance function
continue to evolve with increased responsibility. As the requirements and expectations for compliance management have changed, so too have the expectations for how Compliance should be audited. Any discussion about
how to audit Compliance should begin with the premise that Compliance is, or should be, an auditable area.

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This article was contributed by Protiviti KnowledgeLeader, an online service providing tools, templates, and other resources for internal audit and risk management. Free trials available at www.knowledgeleader.com.

For a limited time KnowledgeLeader memberships are available for the reduced rate of $595 per year. Tell them you heard about it from AuditNet.org.

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Career Advice Q&A

How to Wow Them
Essential Tools for Effective Speaking

 Interview by Robbie Miller Kaplan

author of  How to Say it When You Don't Know What to Say: The Right Words For Difficult Times

As the workplace becomes reliant on technology, there is a continual need for professionals who communicate effectively. Savvy professionals acquire these coveted skills and distinguish themselves from the competition. Joan Detz, author of It's Not What You Say, It's How You Say It: Ready-to-Use Advice for Presentations, Speeches, and Other Speaking Occasions, Large and Small provides timeless strategies to help professionals deliver their message.

For the Q&A click here!

Resume Tune-Ups

When in doubt, thin it out!

by Robbie Miller Kaplan

Aravind has the qualifications employers seek, but they’ll have to hunt to find them. For starters, Aravind should set the margins at one-inch all around and forgo fancy headings and sections; they take up precious space and add little. Next, select fonts at no smaller than 11-point so employers can read the text. Set text to use the full page; with five years of experience, the resume should be just two pages.

For the rest of the critique click here!

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AuditNet Adds a New Career Feature: The Resume Tune-Up.

Nationally recognized resume expert and author of  How to Say it When You Don't Know What to Say: The Right Words For Difficult Times, Robbie Miller Kaplan will select one auditor resume each month and suggest ways to transform the resume from passable to powerful.

If you would like your resume to be considered for a tune-up, please e-mail it to Ms. Kaplan. You will be notified by e-mail if your resume is selected. You will need to make yourself available via e-mail to answer a few questions with a tight deadline.  Ms. Kaplan will send a critique and suggestions to the individual selected and a summary Resume Tune-Up will appear in the monthly newsletter column.  If selected you give AuditNet the right to display your resume for the column.

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From the Editor!

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AuditNet launched a 30 day trial offer for access to the premium content. Simply send in an original audit work program, register for access to the audit work programs and I will upgrade your access to the premium content for 30 days. You can extend this trial offer to one year by contributing four more audit work programs. 

PricewaterhouseCoopers Global Best Practices shared an excellent paper of Building Blocks for Effective Corporate Boards. Make sure you share this with your audit committee!

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Based on the number of articles being contributed to AuditNet we have developed editorial guidelines for future submissions.  If you are planning to write an article please review the guidelines before submission.  We appreciate receiving material from the global audit community in the interest of sharing knowledge. We are also in the process of guidelines for book reviews and other material submitted for inclusion on AuditNet.

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Interested in developing your writing skills with having access to the latest audit and business related books? AuditNet is looking for auditors that would like to review books for the benefit of the audit community. This is an excellent way to build your professional publication library and provide a valuable service for AuditNet users. A list of available books will be provided on request.  For the guidelines click here.

New Benefits of Registration

AuditNet receives many questions on what kind of audit related information is available on the Internet and where to find it. As a result of my research to find the answers to those questions I discover value added resources that are useful for auditors. In the past these resources would have been added to the AuditNet Links Page (aka KARL). To provide an incentive for auditors to register on AuditNet I will begin loading these links to a special page that is only available to registered users.

AuditNet forges new relationships with professional associations and accounting sites to provide auditors with access to audit work programs.

Professional Association Access to AuditNet Audit Programs.

If you want your professional association (IIA, ISACA, ACFE, ACUA, ACUIA etc) to have transparent access to AuditNet audit programs and other content as a benefit of membership contact your professional association official and ask them to pursue this with AuditNet.

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Go to the AuditNet Fraud Resource Center and check out the fraud news feed to keep up to date with media reported fraud happenings. 

Audit Programs

The audit programs section of AuditNet requires registration in order to access.  New audit program contributions are available only to paid subscribers or on a one-for-one exchange basis. However 181 standard management audit programs were added this month to the free content thanks to Professor Andrew Chambers of the UK. There are over 65,000 registered users. A multi-user subscription rate was added to the individual subscription program to the premium content. Organizations that need more than 2 staff members accessing the service will benefit from this new rate. There are new additions to the premium audit programs available as an alternative for those auditors that are unable to contribute material to AuditNet®. Site licenses are also available for organizations with more than 15 users.

The best way to find all the resources on the site is by going to the Virtual Library or use the site search.

Global Best Practice Papers

What's new: Uncover the gap with a no-cost benchmarking survey   How can you uncover the gap between your current performance and the suggested, more optimal way to perform the process?   Each month for the next year, the Global Best Practices Uncover the Gap series will spotlight a benchmarking tool on globalbestpractices.com. Complete the featured survey and receive a report that will uncover the gap by comparing your operation and management processes against others--and at no cost to you.   Over the course of the next 12 months, you will have the opportunity to participate in 12 different benchmarking studies. Once you submit the information for the month's featured survey, you can expect to receive your results within five to seven business days. These surveys do not count against any limitations in your subscription; but remember--each tool will be available at no cost only during the month in which it is featured.   Global Best Practices is kicking off its Uncover the Gap series with its close-the-books benchmarking tool. You can use the following link to access the tool: Uncover the Gap.

Automated Techniques for the
Detection of Procurement Fraud

by Mike Blakely

As procurement systems become increasingly automated and process larger numbers of payments, the need for both preventive and detective controls over fraud takes on greater importance. Regardless of how well controls are designed and implemented, there is invariably an opportunity for error or fraud, especially if participants are sufficiently motivated. Thus the auditor should perform at least some analytical tests, in order to comply with SAS 99 and satisfy that basic controls are functioning as intended. However, too often this process can be likened to searching for a “needle in a haystack,” simply due to the sheer volume of records.

This article describes several approaches that are suitable for examining very substantial volumes of transactions. It has been written for dual purposes; 1) to provide insight and support to the practicing auditor of techniques that can be applied in real world situations and 2) be used as the basis for course exercises and assignments in accounting/auditing courses for students wishing to enter the audit profession.

This article is patterned closely upon the information included in the audit report published by the Wake County School Public School (WCPSS) Board in response to two frauds. Although much of the article and scenarios described are based on official reports, all of the data, including names, numbers and amounts are strictly fictitious and have been changed.

For the complete article including the link to the sample data click here!

For Automating the Fixed Asset Audit article by Mike click here!

About the author: Mike Blakley is currently an IT auditor with the State of North Carolina, Department of Health and Human Services. Mike maintains a blog devoted to audit software topics at http://blog.ezrstats.com and his e-mail address is Mike.Blakley@ezrstats.org.

*Data Analysis Tools and Techniques for Auditors

Recovery Auditing: Reducing Profit Leaks

Why Internal Audit is in the Best Position to Recover Savings for the Company

Ask any internal auditor and they will tell you that the regulatory compliance focus has impacted their ability to do financial, operational and system audits. A main reason is the shortage of skilled internal auditors and, as a result, much needed audits are not being done.

Cash recovery audits are stuck on the to-do-but-still-undone list, which is a shame given internal auditors can be an invaluable resource to a company by locating savings in a variety of areas: healthcare audits, advertising agency reviews, telecommunication audits, or a simple double payment to vendor review. These are just a sample of the possibilities and given the specialized knowledge required, internal auditors should initially partner with a provider firm to ensure they have the necessary skills. After the first couple of audits, they can perform such audits in perpetuity.

To read the rest of this article click here!

Upcoming Webinars and Events

November 13, 2007 Declaring WARR - Presented by Health Decisions, Inc.

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November 14, 2007 T&E Expense Reporting: Prevent Costly Errors and Minimize Fraud Webinar   - Webinar

November 15, 2007 How to Save Millions and Pay for Your Department in Perpetuity - New Jersey All Day Seminar

December 18, 2007 How to Save Millions - North Carolina All Day Seminar

Access to the free audit program section now requires registration.  The following audit programs, ICQs, checklists or working papers were added this month. They are available on a 1 for 1 exchange for an original audit work program not currently in the inventory. If you unable to share audit programs then consider subscribing to the premium content which provides you with access free and premium content 24/7/365.  Interested in previewing all the programs in the premium content section? Contribute an original audit work program not currently in the inventory and receive a 30 day trial subscription to the premium content. Contribute 5 programs and receive a one year trial subscription. (Offer only available for new programs submitted).

When Sarbanes-Oxley passed in 2002, it forced many companies to take an in-depth look at internal
Accounts Payable controls. Implementing internal controls takes time, but may prove to be a very cost- effective measure if any fraud or leakages are found. The following approaches, requiring some degree of
data mining and programming capability, are fairly straightforward and should tighten up your A/P audit.

For Part Two of this article click here!

If you missed Part One of this article click here!

A: For best practices on inventory counts such as fixed assets I suggest using the following document:

Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property which can be found at this link.

Here is an excerpt that mentions when and what to count. In order to count an appropriate amount of the total inventory, management must decide which inventory items to count and how frequently those items should be counted. The most desirable goal would be to count all of the inventory items at least once a year. However, maintaining accurate inventory records by counting items takes time and costs money. Since there are typically limits on these resources, the best way to balance control of the inventory and cost of the count is to focus on the items determined to be more important or of higher risk to the organization. Accordingly, it is not always practical to give the same treatment to each item; it may be desirable to segment the inventory into identifiable classes and assess the risk for each segment or class to determine the frequency of counts.

If you have a question for Ask the Auditor click here!

AuditNet is interested in developing a series of SOx or industry related audit programs for organizations. If anyone is interested in writing audit programs, ICQs, questionnaires, or control matrices on a work for hire basis please contact me. If you may know of anyone who would be interested in this as well please pass along my contact information.

AuditNet Construction Corner News