New survey of internal auditors lists top risk-assessment and audit-planning considerations

By Joseph McCafferty

October 12, 2016

As internal auditors begin the process of planning audits for 2017, they are also looking to refine that planning process, which, of course, depends a great deal on risk assessment. With an intense focus on adding value, risk assessment and audit planning are as important as ever. A new survey finds that internal audit departments are reviewing those process and looking to improve risk assessment and audit planning in a few critical areas.

According to the survey, by Walters Kluwer's TeamMate Solutions unit, the top priorities include moving to a more continuous risk-assessment process and addressing strategic and emerging risks. Other "key considerations" include considering the impact of macro risk factors, sharpening the organization's focus on cyber-risks, and making the audit planning process more dynamic so it can be updated as conditions change.

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Despite vigorous efforts by regulators in the United States and Europe to punish bribery, it still plagues many parts of the world

By Joseph McCafferty

October 11, 2016

The U.S. Department of Justice and the Securities and Exchange Commission are on something of a roll lately in bringing corruption cases to fruition under the Foreign Corrupt Practices Act (FCPA).

Together, the agencies concluded 26 enforcement actions against companies and individualsincluding three cases where regulators declined to prosecute but enforced strict reformsthrough the first half of 2016, according to the FCPA Blog, which tracks such cases. That's more than the 20 enforcement actions the DoJ and SEC jointly concluded in all of 2015, including nine declinations. And most experts expect the second half to be just as active in terms of corruption enforcement.

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A conversation with Thomas Sanglier, director of internal audit at Raytheon

October 7, 2016

Finding the right candidates to fill internal audit positions is getting more difficult. Not only are salaries rising for internal auditors, making it more expensive to hire good applicants, but the array of skills needed for today's internal audit departments are so varied that those that possess all the right talents—including IT knowledge, communication skills, business acumen, critical thinking, risk management, industry knowledge, fraud-finding abilities, and several others—are hard to come by.

Internal audit managers that are looking to fill gaps in the department's collective set of skills have few options. They can pay more to hire talented individuals away from other companies, they can turn to outsourcing to complete work that they don't have the necessary abilities or numbers in house, or they can look to hire candidates without the typical internal audit background that is heavy in accounting and finance training and experience.

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A week-long series of internal audit courses provides New York-area internal auditors the opportunity to fill gaps in their portfolio of skills

October 5, 2016

New York area internal auditors will have the opportunity to get up to speed on several topics all in one week, as MISTI's Training Week heads to the Big Apple.

The week-long series of seminars will take place from October 17-20 at the Convene Conference Center in Midtown Manhattan. Internal auditors can choose from among nine courses, including such foundational courses as Fundamentals of Internal Auditing, IT Audit School, and Intermediate IT Audit School.

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FedEx Chief Audit Executive Robert King on what internal audit departments need to do to rise to the occasion

By Joseph McCafferty

October 4, 2016

There are several big challenges facing internal audit departments and still more facing the internal audit profession as a whole. Some of them represent opportunities as well as obstacles to overcome. The difficulty in filling internal audit positions with talented candidates, for example, has led to increases in pay for many internal auditors. The need to do a better job leveraging technology has the potential to free internal audit up to do more valuable and higher-level jobs, raising internal audit's profile in the organization.

"It's a great time to be in the internal audit profession," said Robert King, chief audit executive of FedEx, during a keynote speech at the SuperStrategies 2016 conference held last week in Las Vegas. "Executive teams are continually reaching out to us to do more, so it's a great time that we are being asked to be in the game."

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A conversation with Thierry Dessange, vice president of technology audit at Visa Inc.

Interview By Joseph McCafferty

October 3, 2016

Whether it's data analytics; governance, risk, and compliance solutions; or planning and collaboration software packages, most internal audit departments are looking to improve their use of technology as they strive to do more with less. Meeting the organizational mandate to provide more value means achieving greater efficiency, and technology offers the best chance at doing that.

Still, many internal auditors say they have muchwork to do to get where they want to be on the spectrum of those who use technology to its full potential. A recent study by the Institute of Internal Auditors found that just 40 percent of internal audit leaders say their departments embrace technology at what they consider to be appropriate levels. More than half said they were lagging on the use of technology. A separate Deloitte study found that only 7 percent of respondents say their internal audit department is using data analytics at an advanced level.

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The Department of Justice’s Pilot Program awards credit and even a pass to companies that go the extra mile after finding evidence of corruption

By Thomas Fox

September 30, 2016

This year is sure to be one for the books for Foreign Corrupt Practices Act (FCPA) enforcement. By the end of June, there were more FCPA enforcement actions in 2016 than in all of 2015, and it doesn't appear that things will be slowing down anytime soon. The Fed's aggressive campaign against bribery and corruption rolls on.

Yet this surge in FCPA cases isn't even the most significant development in corruption enforcement so far this year. The single most important development is the announcement of the Justice Department's Pilot Program for FCPA enforcement, which provides some relief for companies that meet high standards for cooperating with regulators during investigations.

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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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