A brief look at this week's news insights that impact internal auditors
By Marcos Colón
January 6, 2017
The new head of the SEC is announced, an audit report uncovers misspent funds tied to Colorado's Obamacare exchange, and the PCAOB's revamped auditing standards take effect. This and more in a collection of the top internal audit news items of the week.
Former Bank and Hedge Fund Lawyer Tapped to Run SEC
President-elect Donald Trump has selected a prominent lawyer that represented banks and hedge funds to run the Securities and Exchange Commission. On Wednesday, the Trump transition team issued a statement indicating that Jay Clayton, partner at Sullivan & Cromwell, has been tapped to oversee the Wall Street regulator. Clayton previously represented Goldman Sachs Group Inc., in addition to investment firms like Och-Ziff Capital Management Group and Oaktree Capital Group. “Jay Clayton is a highly talented expert on many aspects of financial regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules,” Trump said in the statement.
A recently released audit report alleges that Colorado’s Obamacare exchange misspent $9.7 million from grants intended to set up the program. The audit report, conducted by the U.S. Department of Health and Human Services’ Office of the Inspector General, recommends that Connect for Health Colorado repay the funds, according to a report by The Denver Post. The audit’s findings indicate that the exchange did not sufficiently document how $4.4 million was spent on contractors and consultants, or how $4.5 million was allocated to prepay for contracts set to run past the end of fiscal 2014, the time by which all of the grant money was to be spent.
How Organizations Can Build an Ethical Workforce
A fundamental step in managing an organization’s risk posture is working toward an ethical organizational culture. Implementing the right hiring approach is key in hiring employees with the mindset needed to build this environment. There are traits that the internal audit function can focus on to ensure only individuals with ethical behavior ultimately make the team. Key traits include being morally attentive, such as noticing ethical dilemmas where most employees wouldn’t, as well as conscientiousness, which will ultimately prove the employee is careful, reflective and reliable.
Auditors Ready to Follow PCAOB’s Revamped Auditing Standards
After ringing in the new year, auditors are ready to follow the Public Company Accounting Oversight Board’s reorganized auditing standards rule book. Although big changes have not been made, significant adjustments such as integrating older standards with new ones, and organizing the guidelines chronically are enhancements that should benefit auditors. The reorganized rule book includes five sections that include general auditing standards, auditing procedures, auditor reporting, matters relating to filing under federal securities laws, in addition to other events related to audits.
AICPA Issues Guidance on Revenue Recognition
The American Institute of CPAs has released an audit and accounting guide on the new revenue recognition standards. The recently issued guide is aimed at assisting auditors in comprehending, as well as implementing, the standards issued by the FASB, in addition to the International Accounting Standards Board, in 2014. While public companies need to adhere to the standards for reporting periods that start after Dec. 15, 2017, private companies will have an additional year before applying the standard. The AICPA, as well as the SEC, have strongly encouraged organizations to prepare for the standard.
Following an inquiry led by internal auditors at Zimbabwe investment firm Mashonaland Holdings, irregularities in granting staff loans have been uncovered. During the release of the company’s financial results for the fiscal year ending in September 30, company chairman Ron Matandagayi disclosed the findings of the audit report, which led to the company enlisting the help KPMG to further investigate the issue. According to a report by NewsDay, Matandagayi said the board will “institute legal proceedings it considers necessary to resolve and address any irregularities noted.”
West Coast Auditors Prepare for Bay Area Training Week
Internal auditors in need of honing their skills will have the opportunity to access one week’s worth of courses provided by MISTI’s upcoming Training Week in the Bay Area. Some of the 12 featured courses include Fundamentals of Internal Auditing, IT Auditing and Controls, and Root Cause Analysis for Internal Auditors. Notable instructors such as Dr. Hernan Murdock, Thomas Salzman, and Greg Duckert will be leading the discussions. The week-long series of seminars is set to take place from February 6-12 at the MicroTek Computer Lab in San Francisco.