Difficulties finding job candidates with the right mix of skills among the top challenges for internal audit

By Joseph McCafferty

September 28, 2016

One of the top challenges facing internal audit departments today is finding the right people with the right set of skills. Internal audit executives say that getting good job candidates is difficult and finding people with the complete set of talents for the modern internal audit department is even harder.

During the SuperStrategies 2016 conference, being held in Las Vegas this week, the talent gap was a common theme of several sessions and talks. Internal audit leaders say that they need to be more strategic in their hiring practices to get the right mix of individuals.

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A look at some of the habits and characteristics that can take an audit department from good to great

An interview with Joel F. Kramer

September 28, 2016

What are the characteristics that define a truly world-class audit department? Leading internal audit departments address emerging risks, embrace diversity of thought, communicate well, and are on the cutting edge of data analytics.

In the latest edition of our video series "MISTI on Audit," Joel F. Kramer, vice president of audit curriculum at MIS Training Institute, shares these top attributes of a world-class internal audit department that he has collected over a career as both an internal auditor and a top audit instructor, along with some other hallmarks of a successful internal audit team.

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Two former company accounting executives also agree to settle charges, including fines and suspensions

By Joseph McCafferty

September 28, 2016

The Securities and Exchange Commission settled charges with oil services company Weatherford International that it inflated earnings by using deceptive income tax accounting. Two of the company's former senior accounting executives have also agreed to settle charges that they orchestrated the fraud. In the settlement, announced on September 27, Weatherford has agreed to pay a $140 million penalty.

According to the SEC's order, Weatherford fraudulently lowered its year-end provision for income taxes by $100 million to $154 million each year "so the company could better align its earnings results with its earlier-announced projections and analysts' expectations." The fraud inflated Weatherford's earnings by as much as $900 million from 2007 to 2012, the SEC said.

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With news of several frauds at U.S. companies making headlines, some internal auditors are looking to increase their fraud-finding skills

September 26, 2016

The Securities and Exchange Commission has taken action against several fraudsters over the past few days, including charges against a group of movie executives for making false claims about the construction of a movie studio and a man who is charged with registering several "blank check" companies.

Those cases come on the heels of the massive Wells Fargo scandal, where 5,300 employees were fired for opening nearly 2 million phony accounts. While it's still unclear what role internal audit played in that failure of oversight and internal control, the case has certainly raised concerns at many companies about how to detect fraud and wrongdoing and keep it from expanding throughout the company.

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The AICPA wants to build a common standard for assessing and reporting on cybersecurity programs

By Joseph McCafferty

September 21, 2016

There's a lot going around these days: viruses, malware, Trojans, ransomware, you name it. And if you're not careful, you could catch a nasty case of any of these inflictions.

Most companies are taking great pains to inoculate themselves by building up their cybersecurity programs and managing the risks. Yet nobody seems to be completely immune. That's partly because, like the immunization system against infectious diseases, defense against cyber-attacks and other computer maladies depends a good deal on the cybersecurity habits of others, including partners, suppliers, cloud providers, data services, resellers, and nearly every entity that interacts with your network or data. But how do we know if these third parties are making the same effort to prevent attacks as we are? We don't.

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A look at why companies are moving past the days of staffing internal audit departments with nearly all CPAs

An interview with Joel F. Kramer

September 21, 2016

It's no secret that internal audit departments are doing a wider variety of audits that increasingly take them outside the financial reporting sphere. They are also changing the way they staff the department to keep up with that trend. They are hiring non-traditional auditors with backgrounds in technology and other disciplines and finding employees with more varying business experiences.

In this second installment of our new series, "MISTI on Audit," Joel F. Kramer, vice president of internal audit curriculum at MIS Training Institute, offers his views on why it's important to widen the aperture on what the typical internal auditor looks like, including his or her background, specialties, and experience.

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Risk management and internal controls expert Norman Marks dissects the bank's failure to prevent a wide-scale fraud

PODCAST

Interview by Joseph McCafferty

September 20, 2016

As the fallout from the Wells Fargo fraud case continues, several questions still linger. Chief among them is if CEO John Stumpf will continue to hang on to his job. During a congressional hearing on the scandal on Tuesday, Senator Elizabeth Warren (MA-D) called on the CEO to resign and for a criminal investigation into the fraudulent activity at the bank. Another big question is whether similar behavior was taking place at other big banks.

For internal auditors and risk managers looking for lessons from the case to guard against something similar from happening at their own companies, the open questions are of a different nature: Was there a breakdown in internal controls to allow the fraud to take place? Did internal audit fail to uncover the illegal practices or were concerns ignored when internal audit raised them to senior management? Where was the breakdown in oversight to allow so many individuals to do the wrong things?

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A new report from the IIA says nearly half of internal audit departments don't fully apply its professional standards

By Joseph McCafferty

September 16, 2016

Among the most important functions of internal audit's leading professional organization, the Institute of Internal Auditors, is to act as keeper and caretaker of the occupation's code of conduct, the International Standards for the Professional Practice of Internal Auditing. While the IIA goes to great lengths to keep the standards updated and applicable, a survey it conducted last year reveals some sobering news: Nearly half of the chief audit executives (CAEs) polled say they only apply part of the standards to their work or that they don't use them at all.

The results, reported earlier this month by the IIA, are likely to raise eyebrows among practitioners and regulators alike, as the internal audit profession seeks to automate some processes and increase its influence as a partner with the business inside most companies.

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Women make inroads to internal audit's upper levels, but still find roadblocks along the way

By Joseph McCafferty

September 14, 2016

The road to equality for women in the internal audit profession has been a bumpy one. It's led to some higher plateaus, sure, but it also has left plenty of hills still to climb.

Here's the good news: among most internal audit positions in North America, women have all but erased the gender gap and now occupy 51 percent of those jobs. Now for the bad news: among the top internal audit position—chief audit executive—women still lag behind their male counterparts, occupying less than 40 percent of CAE jobs, according to new survey results from the Institute of Internal Auditors (IIA).

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The accounting standards keeper issues the final pillar in its plans to update accounting for financial instruments

By Joseph McCafferty

September 14, 2016

The Financial Accounting Standards Board has issued a new proposal that it says would make "targeted improvements" to the accounting guidance for hedging activities.

Among the changes the update would impose, if adopted, are expanding the use of component hedging for both non-financial and financial risks and refining the measurement techniques for hedged items in fair-value hedges of benchmark interest rate risk.

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A Common Security Framework could help healthcare organizations do more with less

By Cathlynn Nigh

September 13, 2016

As you may have heard, healthcare organizations have been under attack during the last three-plus years by various types of malicious hackers. The biggest of those attacks came against a healthcare payer organization which had over 100 million of its healthcare records exposed to a hostile government entity. The average cost of a typical data breach is about $155 for every lost or stolen record.

For healthcare organizations, however, the cost are even higher. The average cost per "PHI" (personal health information) record stolen rises to over $360 per record, according to a 2015 Ponemon Institute study. The concerns of hacks and data breaches weigh heavily on healthcare executives and officials, and complicate what are already hectic activities within the healthcare world. The perils of hacking and malware cause healthcare organizations, companies, and employees to be stretched to the breaking point.

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The phony accounts scandal will likely reignite the debate over risk-taking and internal controls at big banks

By Joseph McCafferty

September 12, 2016

It's often said that the regulatory response to a large financial scandal or series of frauds will be swift and sweeping, and that it will do absolutely nothing to stop the next series of frauds or scandals.

That sentiment appears to be playing out in the banking sector, with news of the Wells Fargo phony accounts scandal. The massive-scale fraud took place right under managers' noses throughout the bank, even as large banks are still implementing the regulatory reforms required by the Dodd-Frank Act—Washington's regulatory answer the mortgage crisis, when banks took foolish risks and failed to provide proper oversight.

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Internal audit jobs make list of 'hot positions;' CIA certification in high demand

By Joseph McCafferty

September 7, 2016

Salaries of internal audit and IT audit professionals are expected to increase by an average of 3.9 percent in 2017, according to the latest annual salary guide from staffing firm Robert Half.

The guide, which projects salary increases for several professional occupations next year based on data gathered by specialized recruiters throughout the firm's U.S. offices, indicates that pay for internal auditors will increase by more than the 3.6 percent average of all professional occupations and even more than those in other accounting and finance fields, which are forecast to rise at 3.7 percent.

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Internal auditors are on the front lines of pushing organizations to do the right thing

PODCAST

Interview by Joseph McCafferty

September 7, 2016

It's not often that you hear about auditors and accountants in the same breath as aid workers, healthcare providers, or charity workers. Indeed, you won't find internal audit on Forbes' list of the 25 Most Meaningful Professions. And yet, internal audit can be a force for good. In their role of assuring systems are in place to prevent fraud and corruption, internal auditors can help organizations, especially public entities, fulfill their mission and help solve the problems the world faces. It's a grandiose idea, to be sure, but not an inaccurate one.

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A new approach to marketing and media audits can provide improvement to the bottom line

By Angela Saferite

September 6, 2016

Cash rebates, free media inventory rebates, mark ups from 30 to 90 percent, dual rate cards, and non-transparent business practices are all things that can keep senior audit managers and audit committee members of the board awake at night.

Unfortunately, the Association of National Advertisers noted all of these as areas of concern in the 58 page Media Transparency Study it released in June. The study was conducted by K2 Intelligence and a follow up publication by Ebiquity, released in July, outlines business practices and controls advertisers should have in place to better manage media spend in the U.S. market. The K2 report should be used by all advertisers "as a catalyst to rethink their approach to media."

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Sticking your neck out to fight corruption and fraud is part of the job

By Joseph McCafferty

August 31, 2016

For the last few years we've been hearing about the skills and traits needed for good internal auditors. The lists generally include things like communication skills, critical thinking, IT savvy, and business acumen. Add one more to the list: "courage."

Earlier this month, I spent a week in Ghana attending MISTI's Audit, Risk, and Governance Africa conference. During the week I met several internal auditors at both government and private organizations from around the continent. Not surprisingly, they talked about much of the same things that internal auditors are concerned about here in the United States—the need to move into non-traditional areas of auditing, partnering more with the business to add value, and leveraging technology and data analytics.

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Good employee engagement and retention strategies foster inclusion and open communication

By Stefanie Diaz Thibeault, CPA, CIA

August 31, 2016

It's hard to justify recruiting great talent, investing in training, and passing on company knowledge, only to find that those recruits eventually leave for competitors because they didn't feel engaged. It's a story we've heard before. People want to work where they feel like they can succeed and contribute in valuable ways. Surprisingly to some, pay is less important than factors such as opportunities for advancement, development, and recognition.

So, what do we do?

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Award puts the agency over the $100 million mark in awards paid

August 30, 2016

The Securities and Exchange Commission has awarded more than $22 million to a whistleblower this week, putting the agency over $100 million in total whistleblower bounties awarded since the program was established in February 2011 under the Dodd-Frank Act.

The $22 million-plus award is the second-largest total the SEC has paid to a whistleblower. The Commission said the award went to an unnamed company insider, "whose detailed tip and extensive assistance helped the agency halt a well-hidden fraud at the company where the whistleblower worked." The largest award, $30 million, was paid out in 2014 also to an anonymous tipster.

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A good risk culture is about accountability and ownership

By Joseph McCafferty

August 24, 2016

Everyone knows that culture is set at the highest levels of the organization. We may all be tired of hearing about "tone at the top," but it's never been more important. Apart from influencing the culture of the organization as a whole, executives—especially the CEO—have a big role to play in setting the risk culture.

During the Audit, Risk, and Governance Africa conference early this month in Accra, Ghana, Andrew Smuts, head of internal audit and enabling functions at Standard Bank Group, discussed the central points in setting the risk culture at the organization, including tone at the top, risk appetite, and how the risk plan is communicated to the organization.

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Managing a small audit department is an exercise is stretching the buck

An interview with Joel F. Kramer

August 24, 2016

Managing a small audit department is never easy. Covering a seemingly endless stream of risks with limited resources can be trying for any audit leader. Small audit department leaders must become experts in time management, stretching the budget, and focusing on what matters.

In this first installment of our new series, "MISTI on Audit," Joel F. Kramer, vice president of internal audit curriculum at MIS Training Institute, offers some advice for leaders of small audit departments on how to get the most out of a small team and a small budget.

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