A brief look at this week's news insights that impact internal auditors

February 24, 2017

How important information governance is during restructuring planning, IT security budgets are on the rise in 2017, and how the treasurer of a Swiss technology firm may be to blame for a $100 million shortfall in the company's 2016 results. This and more in this edition of This Week in Internal Audit.

Article 3 2.23Why Information Governance Should be Top of Mind During Restructuring Planning

During restructuring planning, many times information governance isn’t at the top of an organization’s list, which could lead to dire consequences for the business. In today’s corporate environment, restructuring is as complex as it gets, with IG failures impacting both budgets and timelines, causing the business to miss its goals. There are key areas of focus when aligning the efforts of the restructuring team during an acquisition to ensure that no compliance violations or unknown storage costs arise. This article highlights how and why IG should be a concrete part of restructuring discussions to make certain that the post-restructuring environment falls in line with the organization’s objectives.

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Businesses Intend to Bolster IT Security Budgets

As the threat landscape continues to evolve and threats like ransomware increasingly plague organizations, security budgets may be on the rise, according to a recent study. Of the 1,100 senior security executives surveyed around the world in the “2017 Thales Data Threat Report,” 73 percent indicated that they plan to increase security spending this year. The increasing spending intent is likely tied to the high-profile data breaches that have taken place. A majority of respondents indicated that they had experienced a data breach, which correlates with the large number that shared they felt vulnerable to data threats (88 percent). 


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Swiss Technology Firm Discovers $100 Million Fraud SchemeArticle 2 2.23

ABB, a Swiss engineering group, has discovered what it describes as a “sophisticated criminal scheme” that involves its South Korean subsidiary. The prime suspect in the ruse is believed to be Oh Myeong-se, the treasurer and former head of compliance for ABB Korea who has disappeared since Feb. 7. Suspected of forging documents and colluding with third parties, his activity has resulted in a $100 million shortfall in the company’s 2016 results. This is the second fraud-related issue that has sparked up for ABB this month, after disclosing on Feb. 8 that it’s being investigated by the U.K. Serious Fraud Office for a separate criminal probe.


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DOJ Releases Guidance on Compliance Programs

The Fraud Section of the Department of Justice has published guidance on how it assesses compliance programs. A report titled “Evaluation of Corporate Compliance Programs” features 11 sections and covers topics such as risk assessment and remediation of underlying misconduct. Those well-versed in compliance may not find the contents of the guide ground-breaking, but it does provide a clearer understanding of how the DOJ evaluates the effectiveness of corporate compliance programs. “We recognize that each company’s risk profile and solutions to reduce its risks warrant particularized evaluation,” the Fraud Section stated. “Accordingly, we make an individualized determination in each case.”

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Article 3 223Young Companies Could Benefit from Internal Auditors

Large organizations may commonly be associated with internal audit departments, but smaller companies could benefit from the expertise of an internal auditor as well. By outlining the risks that a young company faces as it heads down its strategic growth path, having an expert that can guide the business through both financial and operational risks goes a long way. While the same approach can’t be taken as it relates to performing an audit on a business, two common concerns that many organizations would place near the top of their list are vendor management risk and cyber risk. Given the evolving threat landscape, smaller organizations benefit greatly by having an IT auditor assess these risks.


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