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The Benefits of Continuous Monitoring Presented by Michael Cangemi and Bill Sinnett

The Benefits of Continuous Monitoring Presented by Michael Cangemi and Bill Sinnett. Definitions Companies Company Initiatives Key Findings. Agenda. FEI’S MISSION

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The Benefits of Continuous Monitoring Presented by Michael Cangemi and Bill Sinnett

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  1. The Benefits of Continuous Monitoring Presented by Michael Cangemi and Bill Sinnett

  2. Definitions Companies Company Initiatives Key Findings Agenda

  3. FEI’S MISSION FEI’s mission is to advance the success of senior-level financial executives, their organizations and the profession. Since 1931, FEI has been connecting members through: Interaction Providing local and international forums for connecting you with your peers; Information Providing you with insight to assist in informed business decisions; Influence Providing authoritative representation for your interests; Integrity Providing the tools to advance the profession through ethical leadership.

  4. Financial Executives Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of FEI. For more than 65 years FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non-members alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations, chapters, and individuals. FERF Bookstore Proceeds from purchases made through the bookstore on the FEI website benefit FERF. www.ferf.org

  5. FEI e-Newsletters FEI Express (Public & Private) FEI Express is where members find out on a weekly basis the latest “scoop” on industry trends, regulatory updates, and technical issues. FEI members can subscribe to the public edition, the private edition, or both. Finance & Information Technology NewsA quarterly electronic newsletter covering IT issues that affect financial executives. IOU: Insights, Observations and UpdatesA quarterly e-newsletter offering members insights, observations and updates from K Street to Wall Street. FEI Executive EdgeExecutive Edge is a monthly e-newsletter that will keep you up-to-date with events and development sessions offered by FEI.

  6. Continuous Auditing • CA is an automated, ongoing process that enables internal audit to: • Collect from processes, transactions, and accounts data that supports internal and external auditing activities • Achieve more timely, less costly compliance with policies, procedures, and regulations • Shift from cyclical or episodic reviews with limited focus to continuous, broader, more proactive reviews • Evolve from a traditional, static annual audit plan to a more dynamic plan based on CA results

  7. Continuous Monitoring • CM is an automated, ongoing process that enables management to: • Assess the effectiveness of controls and detect associated risk issues • Improve business processes and activities while adhering to ethical and compliance standards • Execute more timely quantitative and qualitative risk-related decisions • Increase the cost-effectiveness of controls and monitoring through IT solutions

  8. Companies • American Electric Power • Blue Cross/Blue Shield of North Carolina • CME Group (Chicago Mercantile Exchange Group) • Hallmark Cards (Privately-Held) • Hewlett Packard • IBM • Intel Corporation

  9. Companies (Continued) • JC Penney • Microsoft Corporation • United Technologies Corporation • Wells Fargo

  10. American Electric Power • CM Initiatives • A/P uses Oversight Systems to monitor for duplicate payments • Other CM efforts are defined by business process owners • Why They Do It • Operational Effectiveness: Reduce Expenses • CM Enablers • Oversight Systems

  11. Blue Cross/Blue Shield of North Carolina • CM Initiatives • Audit has developed CAMP for use in three areas • Claims monitoring, Medicare and A/P • Why They Do It • Operational Efficiency: Detection of duplicate payments • Compliance Effectiveness: Comply with Medicare • CM Enablers • Continuous Auditing & Monitoring Program (CAMP) • CAMP developed in-house by Audit

  12. CME Group • CM Initiatives • Globex is used for surveillance of clearing firms and trades • History Replay Injector (HRI) tests transaction controls • Global Command Center diagnoses market anomalies • Why They Do It • Compliance Effectiveness: CFTC (Globex) and SOX (HRI) • CM Enablers • Globex, HRI and Global Command Center developed in-house by Audit

  13. Hallmark Cards • CM Initiatives • Check data quality and automate account reconciliations • Why They Do It • Operational Efficiency • Assure that key controls applied consistently • Identify process pain points • CM Enablers • Back Office Associates • SAP GRC • Blackline

  14. Hewlett Packard • CM Initiatives • Monitor data from various perspectives to detect outliers • Why They Do It • Operational Efficiency • CM Enablers • Internal Audit has developed a set of tools to monitor data

  15. IBM • CM Initiatives • Monitor expense reimbursement and procurement • Why They Do It • Operational Efficiency • To identify and remediate control deficiencies as they occur • To provide continuous confirmation of control health • To reduce need for manual testing • CM Enablers • Risk Compliance and Analysis Tool (RCAT) developed by Internal Audit

  16. Intel • CM Initiatives • Global Accounts Payable • Monitoring done by “Controls Group” of 10 FTEs • Why They Do It • Operational Efficiency: Reduce expenses • CM Enablers • Global Accounts Payable uses an internally developed program

  17. Microsoft • CM Initiatives • Accounts Payable and Financial Close • Why They Do It • Operational Efficiency: Reduce expenses • Compliance Effectiveness: Provide transparency • CM Enablers • Technology Enabled Continuous Audit (TECA) for A/P • Controller Workspace for financial processes • After the Fact samples controls on a monthly basis

  18. JC Penney • CM Initiatives • The Audit Technology Group (ATG) uses a full suite of tools to deliver Web applications • Why They Do It • Audit assists management in addressing potential controls gaps and efficiency opportunities • CM Enablers • STAR (Store Assessment Review) provides exception reports • Inventory Management and Selling Strategy Measurements monitors operation effectiveness

  19. United Technologies Corporation • CM Initiatives • UTC’s Center of Excellence wants to eliminate duplicate payments • Why They Do It • Operational Efficiency: Reduce expenses • CM Enablers • Oversight Systems • UTC uses 4 out of possible 110 Integrity Checks offered by Oversight

  20. Wells Fargo • CM Initiatives • Community Banking monitors KRIs at “stores” • Commercial Banking monitors KRIs at “offices” • Why They Do It • Operational Efficiency: Reduce time and travel • Compliance Effectiveness: Improve control environment • CM Enablers • Community Banking Audit developed KRIs for “stores” • Commercial Banking Audit developed Continuous Audit Program

  21. Key Findings • Companies recognize the importance of Continuous Monitoring • CM initiatives require commitment of resources • Internal staff time • Purchase of software tools • CM initiatives need a Champion at senior level • Internal Audit is often the CM Champion • There are many CM software tools available

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