The following posts is part 2 of “Adding Value to Compliance Audits” Given a good understanding of the current level and sources of risk, the next step is to look at the requirement for, and the adequacy and effectiveness of, the control to mitigate the risk. This requires an understanding of the cause and source of the risk and the operation of the control. Is the control still required? Does…
I have been away on vacation and now I have exams to mark and Christmas preparations to finish. So, I must confess that these examples are fillers as I have been too busy to write much else these days. However, I do still feel that they have value. Sometimes fraud is detected through the identification of missing items or transactions; in other cases unexpected transaction are found, highlighting the fraud. …
Hidden Costs The true cost of fraud is more than the total of the financial losses. Stockholder confidence, employee morale and other intangible factors must be added to the monetary losses. Most managers agree with this assessment; however management often encourages fraud by placing unrealistic goals on employees, or by disregarding the rules themselves. Auditors must be aware of the pressures placed upon employees that may lead them to commit…
The company I worked had a fleet of cars that we maintained, and when beyond a certain age, were sold. The analysis below describes an audit that looked at the controls around both of these processes. The new manager of the company garage had only been in charge for a year and was already well respected and well liked. He and his assistant provided quick and efficient maintenance service for…
Imagine my excitement when I had 7 responses to my previous post on Payroll and then my utter disappointment when I found out that all we in Russian and had nothing to do with the content of my blog. This continued for several days and suddenly switched to English posts about Credit Unions. In total I had over 65 spam bot posts including two that wanted to help me monetarize…
Accessing different systems, trying to address auditor requirements, and performing complex analysis – they all present risks. And while I have had a great deal of success, there also have been many mistakes. I once heard it said, “learn from others mistakes – you don’t have enough time to make them all yourself” or something similar. This is why I always try to post a lesson-learned and this post is…
It was hard to believe, but I had now been at this (data analytics to support audit) for 20 years. And I still found it interesting, challenging, frustrating, rewarding and aggravating – all at once. I was constantly being asked to access new systems and perform analysis for different types of audits. At the same time, I had my regular monthly routine tasks of extracting, downloading and cleansing data we…
This is Part2 of an article on developing quantitative indicators of risk to support the annual risk-based audit planning process. Part1 presented the concept that risk (Probability and Impact) can be measured quantitatively by looking at Complexity and Change (which increase the probability) and Materiality or Volume (which increases the impact). It also encouraged you to look at more than financial risk. Part 2 presents examples of indicators of risk…
This was my first attempt at identifying risk to support the development of the annual risk-based audit plan (RBAP). I have been involved in the development of the RBAP – even responsible for it – over the years and always felt that it was more professional opinion than anything else. Some people built a spreadsheet with weighting factors 1-5 and fooled themselves into believing that there is a logic and…
From time to time I was lucky enough to get to do some consulting work. These were usually fairly large audits, involving a number of external experts. As the “data guy” I was often given very little time to perform the required analysis. On such audit was a review of the costs for a major construction project. The audit team did not have all of the necessary expertise and had…