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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Contribution by Internal Audit to IT Compliance

  Thomas Lohre

  …61 Contribution by Internal Audit to IT Compliance By Thomas Lohre, MBA29 The constant increase in laws, ordinances, norms, standards… …objective of corporate compliance and in IT specifically, IT compliance. Internal audit can make a valuable contribution to this, as it can ob- jectively… …assess the IT compliance efforts in companies through its specialist knowledge, methodical knowledge and independence, thereby assisting in the pre-… …vention of rule violations. Furthermore, it can assist in IT compliance adding value to the company by providing valuable information. 1 Introduction… …academic litera- ture and are on everyone’s lips.30 Perhaps even enriched with the concept of IT? In fact, in recent times, IT has increasingly developed… …into a competitive factor, which makes a crucial contribution to the implementation of corporate strategies. Furthermore, it ac- counts for a… …considerable portion of the costs and investments and the legal and regula- tory requirements for IT have also grown significantly.31 Corporate Governance is… …. ___________________ 29 Thomas Lohre, MBA, Graduate in Business Administration/Graduate in Business Informa- tion Technology, CISA, CISM, IT Auditor at DATEV eG… …. This article reflects the author’s personal opinion. 30 In order to no longer debate the relationships between IT, governance and compliance in such… …, see IDW PS 345. 35 The term can be translated with “compliance, adherence to rules”. Schneider accurately de- termines that it is a “truism” that…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Continuous Auditing: Myth and Reality

  Adrian Garrido

  …high- lighted the benefits of using technology to monitor financial transactions on a con- tinuous basis. It appears that this idea has been the future of… …our function for over twenty years, though it is not clear when it will form part of the present. Summary 1: Although Continuous Auditing is a… …powerful concept, it is key to understand its limits and difficulties. Let’s be realistic, simple and flexible. Summary 2: Continuous Audit projects… …auditor. 1 Great Promises Continuous Auditing is, without any doubt, one of the most fashionable terms in our profession. As a proof, it is enough to… …problem of defin- ing samples disappears. Why select a group of transactions when it is possible to perform tests on the whole universe? 2 …Not Always… …, quick and efficient au- dit function. Nevertheless and once we have reviewed all these positive aspects, it is necessary to come back to reality and to… …using technology to perform a continuous supervision of fi- nancial transactions. It would therefore appear that the concept of Continuous Auditing has… …represented the future of our function for over twenty years though it is not clear when it will form part of the present. – Secondly, there is much… …real time a control task that should be performed by the line or could this be an Audit function? – Should it not rather be the Audit’s task to… …important, despite all that has been written and the many theo- retical advantages, it appears that, according to a recent statement of Richard Chambers…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 17: Global Crossing (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 118 Case 17: Global Crossing (2002) Had the attention not been for Enron (the scandal that had it all at… …Crossing abruptly collapsed into bankruptcy in early 2002. On January 28, the company filed for Chapter 11, making it one of the biggest bankruptcies in… …is also part of the wider story of the meltdown in the telecom- munications industry. It epitomized the boom and bust of the so-called “broadband… …network and to sell capacity on that network to other providers and users of telecommunications services. Within four years, it built a 100,000-mile… …registered in Hamilton, Bermuda and run from Florham Park, New Jersey) was a stock market darling during the high-tech mania. But in 2001, when it became… …clear that there were not enough customers paying for the network, Global Crossing began its descent. Ultimately, the company had to acknowledge that it… …not have met analysts’ estimates. In its disclosures, Global Crossing stated that it had sold substantial amounts of capacity to customers to… …whom it had also made substantial cash commitments. The company disclosed the gross dollar amounts of these sales and purchases as well. Nevertheless… …specify that it was becoming increasingly reliant on the reciprocal transactions as a source of cash revenue. Eventually, it failed to disclose that in… …several reciprocal transactions, it purchased capacity that would not be ready for service until some time after the end of the quarter (in some cases…

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• eBook-Kapitel aus dem Buch IT-Unterstützung für Interne Revision und Wirtschaftsprüfung

  Gründe und Potenziale des IT-Einsatzes in Interner Revision und Wirtschaftsprüfung

  Dr. Heinrich Schmelter

  …unter Verwendung der IT durchführbar. Im angloamerikanischen Sprachraum wird für diese IT-Unterstützung der eigenständige Begriff „CAAT“ (Computer… …angloamerikanischen Sprachgebrauch sieht man die IT auch als „Driver” bzw. „Enabler” der maschinellen Prüfungsunter- stützung in der IR12. „With respect to… …understanding IT‘s role and impact, we must recognize that IT serves as both a driver – on setting the strategic direction of the organization – as well as an… …die Prüfungen effizient und sicher durchzuführen ist vor allem ein optimierter Einsatz der IT in der IR zwingend. Das Deutsche Institut für Interne… …Einzelqualitätskriterien erstellt, der insb. in folgenden Punkten für eine funktionsfähige IR direkt bzw. indirekt eine angemessene IT- Unterstützung verlangt13: – Die… …verwalten, ist ein Zugang und eine Prüfung dieser Daten für die IR nur noch unter Verwendung der IT durchführbar. Das Deutsche Institut für Interne… …komplexen Daten- verknüpfungsmöglichkeiten werden Prüfungsansätze und Einsparungen realisier- bar, die ohne IT ansonsten undenkbar wären. Der IT-Einsatz…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Audit Marketing

  Dr. Hannes Schuh

  …targeted marketing measures. It is worth considering audit marketing beyond the numerous, mainly process-oriented measures available in the literature and… …organization? On the one hand audit marketing focuses on the position of Internal Audit Unit in the company, while on the other it is also associated with… …the marketing-oriented focus of the overall organization based on the claim that it adds value. This means that the message at the heart of its… …relevant publications and attendance at internal and external events, it is particularly important to present possible development paths, the education con-… …cept, the systematic preparation for management tasks transparently and where pos- sible to support these with examples. It also makes sense to show… …, the following appears to be relevant: – Internal Audit Unit acts independently. – It knows the administrative culture precisely. – It can address… …litera- ture and opens up new methods. It seems important to be aware that, although IA offers only a few products, these are diverse, that these have…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 13: WorldCom (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …was going to be the next fraudulent company. It turned out to be WorldCom, Inc., at the time the second largest long-distance telecommunications… …SEC said that WorldCom’s accounting improprieties were of “unprecedented magnitude”. But as enormous as the fraud was, it was accomplished in a… …relatively mundane way. The modus oper- andi of the fraud was rather simple, and it was carried out over a comparatively short period of time. Yet the… …Corp. because of antitrust objections. WorldCom’s position as fast-growing provider of integrated telecommunications services (it provided a broad… …demanded that his subordinates met those expectations. It was when he had the greatest need to keep WorldCom’s stock price up that the largest part of the… …standards others will follow.” It was shortly after Ebbers had left that the fraud was discovered and disclosed. Fraud detection and disclosure As… …that it was not her problem. When she continued to raise her concerns, she was told by WorldCom’s CFO, Scott Sullivan (to whom internal audit reported)… …advised of the issue, took it seriously and directed prompt attention to it. On June 20, Cooper attended an audit committee meeting at which Sullivan was… …. Accounting Fraud in U.S. Companies 95 WorldCom announced that it intended to restate its financial statements for 2001 and the first quarter of… …2002. It stated that certain transfers from “line cost expenses” to asset accounts, totalling USD 3.85 billion during this period, were not made in…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 35: Parmalat (Italy, 2003)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …course of a decade. Many analysts took to calling Parmalat “Europe’s Enron”. Indeed, the scandal was so massive that it compares to Enron, WorldCom and… …that its accounting principles were in line with established international accounting standards as well as Italian standards. Yet it appeared not to be… …originality and unique appeal of Parmalat milk soon made it very popular and business expanded to other parts of Italy. Parmalat tried to style itself as the… …“Coca-Cola of milk”. In 1990, Parmalat was listed on the Milan stock exchange – and Tanzi built it into an Italian powerhouse with operations in some… …discovered. The collapse: How it all happened But as Tanzi’s empire grew, so did the debts. Some of the best-known European and American bank… …network of offshore shell companies. Whereas at first, Parmalat did not conform to the usual profile of a risky enterprise, it now operated through a… …, the Isle of Man and Malta. In early December 2003, analysts began to raise questions about Parmalat’s liquidity when the company let it be… …known that it could not access about EUR 500 million in supposedly liquid funds held in an obscure Cayman Islands-registered investment fund called… …“Epicu- rum”. Parmalat soon shocked financial markets when it revealed that it was having trouble coming up with the money to make a EUR 150 million bond… …repayment even though it supposedly had billions in cash and cash equivalents. The scandal came to light with the revelation of a non-existent bank…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 12: Enron (2001)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …become synonymous with corporate malfeasance. However, compared to other accounting frauds, the Enron fraud was very complicated; it involved many… …reports. They didn’t have to lie. All they had to do was to obfuscate it with sheer complexity – although they lied, too.” The impact of the fraud was… …far-reaching, to say the least. It led to the bankruptcy of the once high-flying energy company in late 2001, marking one of the biggest corporate failures in… …since October 1929”. Besides, the fraud ushered in a wave of prosecutions against white-collar crime at the highest levels of American business, and it… …originated a strong reaction (possibly an overreaction) from the regulatory bodies as well. Thus, it is of great importance to understand what actually… …business model: create a “gas bank” in which Enron would buy gas from a network of suppliers and sell it to customers, contractually guaranteeing both the… …outside the United States. The market endorsed Enron’s “new economy” business strategy. In 2000, Enron reported revenues of USD 101 billion, making it… …of these negative developments, it is quite astonishing that by the end of the year, Enron’s image was in tatters and its stock price had plummeted… …(primarily for the water and broadband businesses). It also disclosed a mysterious USD 1.2 billion reduction in shareholder equity, mainly as a result of the… …reversal of dealings with certain off-balance-sheet partnerships, called “the Raptors” (October 16). - Enron announced that it had changed plan…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Fraud Theories

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Fraud Case Analysis: Lessons Learned 276 3.3 Fraud Theories 3.3.1 The Fraud Triangle Although it is common knowledge today that people… …may commit fraud, it is often not understood why they do it. Donald R. Cressey, one of the pioneers in fraud re- search, came to the conclusion that… …less rationalization it takes to motivate someone to commit a fraud. Likewise, the more dishonest a person is, the less opportunity or the less… …pressure it takes to motivate fraud. Fraud-fighters focus their preventive efforts primarily on only one of the three elements of the fraud triangle… …simply in the outcome. Scientists call this motivation the “ego challenge”: it relates to the sense of superiority over others and to the gratification… …obtained from the mastery of an exciting situation. It also reflects the pride of a professional “con artist”. Attitudes are the values and ethical… …honest all the time. Another 20% are basically dishonest, and about 60% are “situationally honest” (that is, honest where it pays to be honest and… …dishonest where it pays to be dishonest). However, most of the organizations are convinced that their executives are among the 20% who are honest. Unfortu-… …nately, quite frequently, this is not the case. Rationalization is how the fraudster justifies his inappropriate actions. In other words, it is the… …soon as we get over this financial difficulty.” – “Business is business. Everybody else does it.” Of course, there are countless other…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Company Culture is Worth the Cost

  Sergey Martynov

  …if it is not included in financial reports, and helps to generate value for a company: it should therefore be audited, just like all other company… …than those caused by unfair competition or mass- media hostility. First of all, it is important to understand that company culture is a distinctive… …guaranteeing success and in the effi- ciency of a business, for various reasons. Firstly, it results in increased employee loyalty towards the company. A… …salary increase. 2 Development of Company Culture While in some organisations company culture is created and grows spontaneously, in others it is… …beliefs, come from various different entities. In these situations it is extremely im- portant for the management to make an effort to rapidly develop a new… …can be positive, but the process of establishing a com- pany culture by example may take a long time. It is extremely important, however, for the… …in order for this to happen it must know how to satisfy the individual needs of its employees. The management must also know how to value its workers… …employees, who will cer- tainly not share or defend its values as a result. It is also extremely important to en- sure that there is a relationship between… …, and it is es- sential that each member of the team feels that he is sharing in the recognition for his work. The development of company culture is… …it: it is therefore a factor that should be taken into consideration by the internal audit, just like all other signifi- cant company processes…

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