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Introduction to the Investigative Audit Services Group

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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  1. Introduction to the Investigative Audit Services Group

  2. 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

  3. 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

  4. 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.

  5. 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

  6. 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

  7. 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.

  8. 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.

  9. Fraud or Fraudulent Actions • Theft • Embezzlement • Kickbacks • Travel reimbursement schemes • Falsification of government documents • Misappropriation/misuse of property • Conflicts of Interest

  10. 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.

  11. 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)

  12. 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

  13. 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

  14. Complaints Received

  15. Investigative Report Findings

  16. Common Themes in Identified Control Weaknesses: • No Segregation of Duties • Lack of Reconciliations • Lack of Documentation • Lack of Management Oversight

  17. 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

  18. Reconciliations • To check a financial account against another for accuracy • Perform periodically and independently to verify the account balances

  19. 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?

  20. 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”

  21. 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 robin-woods@tamu.edu • Debi Fincher dfincher@tamu.edu • Mark Dickerson m-dickerson@tamu.edu

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