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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;

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internal audit s responsibility
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
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
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
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
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
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
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
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
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
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
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
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
common themes in identified control weaknesses
Common Themes in Identified Control Weaknesses:
  • No Segregation of Duties
  • Lack of Reconciliations
  • Lack of Documentation
  • Lack of Management Oversight
segregation of duties
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
  • To check a financial account against another for accuracy
  • Perform periodically and independently to verify the account balances
  • 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
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
Contact Information
  • SIAD Phone: 979.458.7100
  • Hotline: 888.501.3850
  • Website:
  • SAO Website:
  • Email:
    • Robin Woods
    • Debi Fincher
    • Mark Dickerson