Do we need audits?

Should companies eliminate audits? A interesting viewpoint by Fortune.com 

The current system for analyzing and auditing companies’ internal controls needs an overhaul.

Do the millions that large companies spend on annual audits actually provide the information investors need and are paying for? And are the earnings reports that companies produce trustworthy? If recent events offer any indication, the answer to both questions is likely a resounding no.

On June 8, the U.K.-based CCP research foundation reported that from 2010 to 2014, 16 global banks, including Bank of America, JP Morgan, and Citigroup, incurred $300 billion as a result of regulatory actions and other costs related to misconduct. The improper behaviors weren’t just related to actions before or during the financial crisis. Yet investors didn’t receive fair warning from the banks or their auditors about the multiple control weaknesses.

You can read more at https://fortune.com/2015/06/18/company-audits/ 

Companies (Indian Accounting Standards) Rules, 2015 (released on 15th Feb 2015)

MCA has issued Companies (Indian Accounting Standards) Rules, 2015 under the powers conferred by section 133 read with section 469 of the Companies Act, 2013 (18 of 2013) and sub-section (1) of section 210A of the Companies Act, 1956 (1 of 1956).

These Accounting Standards (Ind AS) that are inline with upcoming International Financial Reporting Standards, which will alter the way transactions get accounted in India. 

During the first phase all companies, listed and unlisted, with net worth over of Rs 500 crore and their holding, subsidiary, joint venture or associate companies have to report under these standards for financial year, beginning April 1, 2016.

The second phase, from financial year 2017-18, covers the companies which have equity or debt securities listed Indian or International stock exchanges and have net worth under Rs 500 crore. It also includes other companies having net worth of rupees 250 crore but less than 500 crore and their holding, subsidiary, joint venture or associate companies.

Net worth will be measured as of March 31, 2014.

Firms can voluntarily follow these from April 1 this year itself.

Notably, companies that are listed or in the process of listing on SME platform or ITP platform are exempt. However, they may voluntarily adopt Ind AS

http://www.mca.gov.in/MinistryV2/Stand.html

Riskpro is planning to conduct training on various topics please visit http://www.riskpro.in/training to find out more 

Whistle Blowing to external partiesVs Raising Concerns to the Internal Audit team

A recent article on Sydney Morning Herald  "Whistleblower's NAB leak reveals persistent bad behaviour in financial planning, fuels royal commission calls" raises the question about how seriously was internal audit taken in NAB.

I am sure the internal audit reports would have highlighted these concerns in addition to the serious issues the internal audit team found in NAB's It systems in their 2010 report.

It also raising an interesting point about how people see internal audit in companies. Was the whistleblower from NAB more comfortable in going to the media rather than raising the concerns to the audit team. or did the whistleblower try his luck with internal processes and went to the media only after nothing was happening?


Read more: http://www.smh.com.au/business/banking-and-finance/whistleblowers-nab-leak-reveals-persistent-bad-behaviour-in-financial-planning-fuels-royal-commission-calls-20150220-13hv1f.html#ixzz3SNpSiCTn

Supply Chain Audits

Supply chain professionals do lots of supplier audits. They ask about quality standards, IP data protection, manufacturing process certifications, contract review requirements, document control measures, and source of origin of parts and raw materials.

But, surprisingly, they may not be asking how suppliers deal with bribes and corruption issues, according to a recent report from Achilles, a global supplier information management company.

Globally, about a third of large companies surveyed said they issue tenders or contracts without having an anti-bribery and corruption policy for their main suppliers, noted Achilles in a press release.

Please go to http://www.ebnonline.com/author.asp?section_id=1061&doc_id=276631 for more 

Corporate frauds rose by over 45 per cent in India in the last two years - Is your Internal Audit function upto it?

As per a recent article in Economic Times Corporate frauds rose by over 45 per cent in India in the last two years and the lurking risk has been dissuading global companies from investing in India, said a study. 

Corporate frauds arose out of corruption, money laundering, tax evasion, window dressing, financial reporting fraud and bribery due to weaknesses in internal controls, scarcity of resources and over-riding powers of senior management, it added. 

The study by Assocham and Grant Thornton said companies related t .. 

Read more at:
http://economictimes.indiatimes.com/articleshow/45889366.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Report: Independent commission didn’t allow independent auditing

As reported by - watchdog.org http://watchdog.org/192474/independent-commission-didnt-allow-independent-auditing-report-says/

The top internal auditor for a state agency that has a say in your electric bill might have had to choose between keeping a job and telling the honest-to-goodness truth.

The chief internal auditor of the State Corporation Commission has been reporting to the chief administrative officer, instead of directly to the agency’s three General Assembly-appointed commissioners.

The arrangement sets up a potential conflict of interest, a new audit from the Auditor of Public Accounts says.

The chief internal auditor, meant to operate as independently as possible, could have risked putting his job on the line to report any administrative failings to his boss, or the chief administrative officer could have left out embarrassing details.

“A lack of organizational independence could lead to management pressures affecting the objectivity of the commission’s chief internal auditor,” an audit from the state Auditor of Public Accounts, which regularly reviews state agencies, said. “As a result of the chief internal auditor only reporting to management, its assessments of management may appear to be influenced by this relationship.”

That needs to change, the state auditor said.

“The commission should establish a reporting line between the chief internal auditor and the commissioners for conducting risk assessments, establishing work plans, and issuing audit reports to protect the auditor’s objectivity,” the state audit noted.

The SCC commissioners told the Auditor of Public Accounts they’ve already changed.

Read more on http://watchdog.org/192474/independent-commission-didnt-allow-independent-auditing-report-says/

By Kathryn Watson | Watchdog.org, Virginia Bureau

ALEXANDRIA, Va. —

Internal report helped Mexico to gets green light: DOT ‘opening door’ to cross-border trucking

Sourced from http://fleetowner.com/
http://fleetowner.com/fleet-management/mexico-gets-green-light-dot-opening-door-cross-border-trucking

Less than a month after an internal audit concluded a pilot program lacked enough participants to be statistically conclusive, the Dept. of Transportation said Friday that Mexican motor carriers will soon be able to apply for authority to conduct long-haul, cross-border trucking services in the United States.

Fully opening the border to approved carriers is “a significant milestone” in the implementation of the North American Free Trade Agreement, according to the DOT statement. The policy change ends a 20-year political dispute over the NAFTA trucking provision, and is expected to result in the permanent termination of more than $2 billion in annual retaliatory tariffs on U.S. goods.

And the certainty over that economic impact outweighed the statistical uncertainty from the Federal Motor Carrier Safety Administration’s three-year test program to evaluate the safety impact of granting long-haul authority to Mexico-based trucking companies.

While the recently published audit by the DOT Office of Inspector General did not make any recommendations, it did determine that FMCSA “established sufficient monitoring and enforcement activities” to meet a lengthy list of requirements mandated by Congress. The audit also confirmed FMCSA’s analysis: Pilot program participant carriers, as well as Mexico-domiciled and Mexican-owned carriers with existing authority to operate in the U.S., performed no worse than U.S. and Canadian motor carriers.

Full article available at http://fleetowner.com/fleet-management/mexico-gets-green-light-dot-opening-door-cross-border-trucking

Internal Audit touches Football Associations

Internal Audit findings were used by Prince Ali to create the basis for the banning for life from involvement in professional football of former FIFA executive committee member and AFC President Mohammed Bin Hammam. However, he failed in getting the Asian group to act on recommendations of an internal audit conducted by PriceWaterhouseCoopers (PWC) to possibly file criminal and civil charges against the disgraced official and renegotiate if not cancel the AFC’s $1 billion master rights agreement with Singapore-based World Sports Group. The burial of the audit by Bin Hammam’s successor, Sheikh Salman, serves as another indicator of resistance to change within Asian and world football governance.

For full article refer to http://www.hurriyetdailynews.com/a-vote-for-ali-is-a-vote-for-change--and-challenge.aspx?pageID=238&nID=76784&NewsCatID=365

Why SMEs should embrace financial audits

© Zawya BusinessPulse 2015

© Zawya BusinessPulse 2015
A financial audit involves a comprehensive examination of a business' financial transactions and positions, and is something that large corporations are required to do every year. SMEs are subject to less demanding reporting requirements, but a full annual audit is something that they should still be doing as a matter of course.

There are two kinds of auditing - internal and external. An internal audit is so called because it's conducted by an employee of the company rather than an external auditor. When it comes to SMEs, any internal audit is likely to be carried out by the business owners themselves. If budgets are limited, a company is unlikely to want to employ a full-time auditor as it just doesn't make financial sense.

An external audit is conducted by an outside body that will objectively examine the business' finances as well as look closely at how well internal controls are working. It's worth keeping in mind that for some business deals or lines of credit, an external audit will be required.

Here are six reasons why audited accounts are important for any company, more importantly, small and medium businesses.

1. OBJECTIVITY

If the accounts are only looked over by an employee or the business owner, it can be easy to miss any warning signs. You're likely to be too close to your own business, so a full audit will give the objectivity that's needed to spot if something's not quite right.

2. EXPERIENCED EYES ON YOUR ACCOUNTS

If your accounts are properly audited, the auditor will have the knowledge and experience to see if there's a problem and know what to do to rectify it.

3. LEARNING OPPORTUNITIES

An audit allows you to look closely at how your finances have been managed over the previous 12 months, and if you encounter any issues, it means that measures can be put in place to avoid the same things happening in the future. It also gives businesses the chance to see how well their internal controls are working and change procedures if necessary.

4. MONEY SAVING

As well as being able to see what activities are too time and resource consuming, an account audit will highlight any unnecessary expenditure that can be cut.

5. FRAUD PREVENTION

Quite often, employee fraud or theft only continues over time because there are no checks or controls in place to discover them. A full audit of your accounts and financial position will make any fraudulent activity obvious and gives you the opportunity to tackle it.

6. INCREASED AVAILABILITY OF CREDIT

Many companies or financial institutions will only consider offering lines of credit to a business with fully audited accounts. While it is possible to have an ad-hoc audit completed when you're turned down for credit for this reason, it's much quicker and easier to have your annual audit details ready for this very reason.

If your company is growing, it may reach a stage where you're required by law to audit your accounts. If you already have an annual audit, it's going to make the process easy and painless for all involved.

© Zawya BusinessPulse 2015

Embezzlement cases steal cash from most exposed

Sourced from http://www.finditwestvalley.com/politics/embezzlement-cases-steal-cash-from-most-exposed-h49749.html

The scheme Batts-Porter is accused of operating was simple, federal officials say. She managed Social Safety payouts in the trustee's workplace. The workplace was sanctioned by the Social Security Administration to deal with extra than $1 million in payments per year for residents who are incapable of overseeing their finances.

Possibly Center Township Trustee Eugene Akers summed it up greatest: "Right here we are once again. Everyone wants to steal from the poor people."

On Friday, federal officials announced criminal charges alleging that Carmen Batts-Porter, the enterprise counselor for Aker's workplace, stole more than $66,000 in Social Security payments meant for the poor, elderly and disabled.

Batts-Porter, the daughter of Indiana State Rep. Gregory Porter, D-Ind., is accused of using the revenue to pay off credit card bills and take a trip to Miami.

The charges come two months right after the township's former chief monetary officer, Alan Mizen, pleaded guilty to stealing nearly $350,000 in township funds designated to assist the poor. Prosecutors stated Mizen made use of the revenue to invest in a house, jewelry and take vacations to the Caribbean and the Cayman Islands.

In each instances, the victims had been amongst the most vulnerable in the city. And the thefts bring into question the oversight of township government finances.

Center Township is household to some of Marion County's poorest individuals. Almost half of the township's residents live in households exactly where total revenue and added benefits is beneath $25,000. Much more than 36 % live under the federal poverty line, compared with 20 % for the county.

For lots of of these people — like the elderly, the disabled and orphans — the township trustee is the last resort for assistance.

But over the previous 5 years, federal officials allege, Batts-Porter took dollars from the accounts of 11 people today who counted on the trustee's office to handle their Social Security advantages and pay their bills. Investigators mentioned numerous of the victims had no way of recognizing how considerably dollars was taken from them. 1 victim was an orphan in foster care. A further account was in the name of a dead particular person.

The scheme Batts-Porter is accused of operating was simple, federal officials say. She managed Social Safety payouts in the trustee's workplace. The workplace was sanctioned by the Social Security Administration to deal with extra than $1 million in payments per year for residents who are incapable of overseeing their finances.

Normally, the trustee is designated by a court to manage these funds for residents who can not do it themselves or don't have loved ones members to aid.

"Instead of carrying out what she's supposed to do with the money, she took the revenue and wrote checks to pay off her Target credit card bill," stated Bradley Blackington, the senior litigation counsel who is prosecuting the case.

Several of the checks Batts-Porter is alleged to have written to pay off her bills had memo lines with the beneficiary's name. One particular, according to a probable bring about affidavit, study "load funds onto purchasing card."

You can read more on http://www.finditwestvalley.com/politics/embezzlement-cases-steal-cash-from-most-exposed-h49749.html