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Introduction to the Investigative Audit Services Group PowerPoint PPT Presentation


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Introduction to the Investigative Audit Services Group . Internal Audit’s Responsibility. Develop an annual audit plan based upon a system-wide risk assessment process; Conduct audits in support of the plan; Investigate fraud or fraudulent actions;

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Introduction to the Investigative Audit Services Group

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Introduction to the Investigative Audit Services Group


Internal Audit’s Responsibility

  • Develop an annual audit plan based upon a system-wide risk assessment process;

  • Conduct audits in support of the plan;

  • Investigate fraud or fraudulent actions;

  • Report results to the Board of Regents, the Chancellor, and the Chief Executive Officers; and

  • Coordinate audit efforts with external and state auditors


Governor’s Executive Order RP-36 Preventing, Detecting & Eliminating Fraud, Waste & Abuse

Each state agency shall develop a Fraud Prevention Program that includes the following components:

  • Culture of Honesty and Ethics

  • Antifraud Processes and Controls

  • Appropriate Oversight Processes


Culture of Honesty & Ethics

  • Ethics Policy

  • Fraud Policy

  • Ethics Training

  • Hotline for employees to report wrongdoing

  • Separate investigative group to review reports of wrongdoing

  • Thorough investigations conducted for allegations of fraud with disciplinary action taken against violators.


Antifraud Processes & Controls

  • Internal Audit prepares a System-wide risk assessment as part of the annual audit planning process

  • Fraud Policy states that CEOs have primary responsibility for identifying areas of risk

  • Internal Audit utilizes ACL to test for anomalies in financial data

  • System members utilize positive pay system with banks to detect fraudulent checks

  • Management tracking report for all audit recommendations


Appropriate Oversight Processes

  • Board of Regents is very active in addressing control issues identified in audits and investigations

  • Board of Regents approves the annual audit plan

  • Chief Auditor meets regularly with Committee on Audit

  • Committee on Audit reviews the audit tracking report

  • Management


A&M System Policy 07.01, Ethics

All A&M System employees are expected to adhere to the highest of ethical standards and principles. These standards and principles are set forth in the A&M System Ethics Policy.


A&M System Policy 21.04, Control of Fraud & Fraudulent Actions

Every employee is responsible for reporting factual information suggestive of illegal, improper or dishonest acts and/or practices that may involve the A&M System or one of the System members.


Fraud or Fraudulent Actions

  • Theft

  • Embezzlement

  • Kickbacks

  • Travel reimbursement schemes

  • Falsification of government documents

  • Misappropriation/misuse of property

  • Conflicts of Interest


Methods of Detecting Fraud in Governmental Agencies

  • Tip 39%

  • Internal Audit 20%

  • Internal Controls 20%

  • By Accident 16%

  • External Audit 15%

  • Police Notification 7%

    Association of Certified Fraud Examiners 2006 Annual Report to the Nation

    The sum of percentages exceeds 100% because some respondents identified more than one method.


Report Fraud To

  • Immediate supervisor

  • Agency/University Chief Executive Officer

  • The A&M System Fraud, Waste & Abuse Hotline (reports are anonymous)

  • The State Auditor’s Fraud, Waste & Abuse Hotline (reports are anonymous)


What Happens Next

  • Notification of Agency/University Chief Executive Officer

  • Investigative Group reviews applicable documentation & conducts interviews as necessary

  • Chief Auditor issues report of review findings

  • Management takes corrective action if necessary


Reporting Process

  • Report will identify possible criminal violations, as well as policy violations & significant control weaknesses

  • Draft report reviewed with management if necessary prior to being issued

  • Management required to provide a written response of corrective actions to be taken with regard to policy violations & control weaknesses

  • Summary of investigations is provided to the Board of Regents annually


Complaints Received


Investigative Report Findings


Common Themes in Identified Control Weaknesses:

  • No Segregation of Duties

  • Lack of Reconciliations

  • Lack of Documentation

  • Lack of Management Oversight


Segregation of Duties

  • An employee performs every step in a particular process:

    • Authorizes purchases, receives invoices, prepares vouchers/approves payment, deposits funds, processes reconciliations

  • Important in A/R, A/P, Working Funds


Reconciliations

  • To check a financial account against another for accuracy

  • Perform periodically and independently to verify the account balances


Documentation

  • Ensuring contracts exist which authorize work and payments

  • Is there enough information on the invoice to confirm what is being purchased?

  • Did someone physically inventory or confirm deliverables?


Management Oversight

  • Do you know the duties of your employees?

  • Is there management approval for purchases, including travel and reimbursements?

  • Ultimately, the responsibility rests with management - “Tone at the Top”


Contact Information

  • SIAD Phone:979.458.7100

  • Hotline: 888.501.3850

  • Website: www.tamus.edu/offices/iaudit/

  • SAO Website:www.sao.state.tx.us/SIU

  • Email:

    • Robin Woods [email protected]

    • Debi Fincher [email protected]

    • Mark Dickerson [email protected]


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