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Control Chatter                                                     June 2014
News that Control Professionals Need to Know


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In This Issue
Chairman's Corner
ICI Announcements and affiliate news
2014 Sarbanes-Oxley Compliance Survey
Five Lessons for businesses from the latest fraud statistics.
The COSO effect: How the new control framework adds value, not just work for work's sake.
Enforcement Case Shows SEC's Increased Focus on Internal Controls
Many Companies Slow to Implement 2013 COSO Framework
First Supreme Court SOX decision extends whistleblower coverage
Mapping a Smooth Transition to COSO 2013.
Help Keep Everyone Informed
FREE Assessments
Chairman's Corner
DON'T UNDERESTIMATE LIBABILITY DURING RISK ANALYSIS
William E. Perry
William E. Perry
Chairman Emeritus
Internal Control Institute

From a management decision perspective the end result of risk analysis is a cost benefit analysis. Once the potential loss due to risk is identified, and the methods and costs to reduce that risk are estimated management can make a determination if they will assume all, part, or none of that risk. In 2001 General Motors' engineers identified a risk associated with their ignition switches.  Obviously GM management decided to accept all the risk associated with that problem. In 2004 GM management decided not to delay the introduction of the 2004 Cobalt even though the engineers discovered it was easy to jostle the ignition key out of the "on" position in the Cobalt. Again GM management obviously decided to accept the full risk. Now the cost to fix the problem will be at least one-billion dollars not counting liability. The CBOK for a CICS and CICP lists risk analysis as one of the required skills. The question that needs to be asked is "what should a CICS have done at GM regarding this risk?" In my opinion the CICS should have asked these questions: 1) How much will it cost to fix and install one of these faulty switches?; 2) How many small GM cars using this switch will be built until a fix is designed and installed on all cars with the faulty switch; 3) If a car with the faulty switch is turned off how will driving with the ignition in an off position impact control of the car?; and 4) based on the answer to question number 3 what liability does GM face from damage and injuries from out of control cars. Now ask yourself if a CICS at GM had asked and gotten answers to these questions would GM have taken action to fix their cars earlier? I think they would have.

ICI Announcements

Business Partnership Opportunity

The Internal Control Institute™ (ICI) improves organizational Internal Control worldwide by providing training, products and services and individual Professional Certifications recognized internationally. The Institute's Board of Advisors has determined it would like to further expand into areas where it is not directly represented and particularly in India, Japan, Eastern Europe, Central and South America, etc.. ICI provides world-class programs and its intellectual property to affiliates free of charge and shares all program revenue with them. If your organization is interested in partnering with ICI to earn revenue while you contribute to the development of the internal control profession worldwide please contact Dr. Michael Pregmon, Jr., Chief Operations Officer, by email at: mpregmon@internalcontrolinstitute.org or by phone at 386-279-0661 in the USA.

 

ICI Affiliate News:

The Internal Control Institute is conducting certification training in a classroom format for the internationally recognized CICS certification in internal control. Information on these programs regarding dates and schedules can be directed to the affiliate named below.

 

Brazil:

NEW CLASS FOR INTERNAL CONTROL V - INTENSIVE TRAINING FOR SPECIALIST IN INTERNAL CONTROLS. Registrations are now open for new classes!. ICI Brazil is currently conducting a class with an exam scheduled in August. Two new class are planned, one in July (Brasilia), and other one in August (S�o Paulo). 

For more details on planned training please check on the website below, or send a message to Mr. Eduardo Person Pardini. 

Email: eduardo@crossoverbrazil.com

Website:http://www.crossoverbrazil.com

 

China: 

The CICS (Beijing)Training Course was held on April 16-20, and the CICS Exam was held on April 20,2014. 40 CICS applicants had registered for the training. The second certification training program (CICS training course) was held in Kunming City, Yunnan Province on May 7-11,2014. CICS training courses and exams are planned to be held by CCSIT in July and November. The next CICS (Guangzhou) training course is to be held on June 24-27, 2014.

Individuals or companies interested in internal control training and Certification should contact Mr. Qiu Jianting at;

China Control & Safety Information Technology (Beijing) Co., Ltd.

Room 202-203, East Side Building of No.1 Teaching Building, Beijing Institute of Technology, No.5 Zhongguancun South Street, Haidian District, Beijing, China 

Zip Code: 100081

Mobile phone: 13810588109

 

Europe: 

Mr. Yves Dupont, President of ICIB presented the ICIB Position Paper "Internal Control, more than a compliance exercise; overview of the 12 principles" at the IIA General Assembly on April 25th.

ICIB also conducted two CICS certification examinations on June 5th and June 24th.

For more information on scheduled training and exams please contact Mr.Yves Dupont at:     

Email yves.dupont@icib.org

 

Malaysia:

ICI Malaysia has started class-room trainings and is planning a further schedule of classes. Interested individuals and organizations in Malaysia should contact SBAC for specific information about the programs being offered. 

Please contact So Hsien Ying at:

Email: hyso@sterlingbizgroup.com 

 

Middle East:

The CICS exam is now being provided in Arabic.Osool Training and Consulting has developed an ambitious plan to deploy CICS Certification programs.  Osool plans to make courses and testing available in Jordan, Libya, Muscat, Sudan, and Palestine. In addition, Osool is now marketing CICS Certification in Qatar, the United Arab Emirates and Kuwait, Osool's expansion plan will soon cover Saudi Arabia, Egypt and some other Arab countries.  

For additional information Contact: Tarek Ruhmi at: tarekvbs@osooltc.com

 

Nigeria:  

Leadway Consulting has completed conducting a CICS training sessions and examinations in Nigeria. For more information on upcoming activities in Nigeria  please contact:

Mr. Joel Aluko  tunjialuko5@yahoo.com

 

Romania:

ICI Romania organized a new session of CICS Courses in the period 24 - 28 March 2014. 

The CICS exam date is set on 28 June. 

For more information on 2014 plans for ICI Romania please contact:

Contact person: Mr. Cosmin Serbanescu

Phone: 0040 721 562 111

E-mail: cosmin.serbanescu@internalcontrolinstitute.ro

Web: http://www.internalcontrolinstitute.ro/

 

South Africa:

ICI is pleased to announce it has entered into an agreement with the Internal Control Institute South Africa (ICI SA) as its representative for Products, Services and Internal Control Certifications (CICS/CICP) in South Africa. ICI SA will be responsible for all development activities in South Africa, including professional training. ICI SA reports they are completing work on their website and reviewing and aligning course materials.

For more information on upcoming activities in South Africa please contact Mr. Francois de Villiers:

ICI South Africa

(083) 407-2131

101 Ferndale Street

Brackenfell, 7560

South Africa

 

UK and Ireland:

The Internal Control Institute UK is planning an international conference in London in June 2014 for anyone interested in Internal Control, Fraud Prevention, Risk Management, Managing Processes and Compliance. If you would like to register an interest in attending the event and to receive further details please email: jcvenegas@iciuk.org.  ICI (UK& IRE) publishes an excellent magazine dedicated internal control called "Bottom Line". To request a copy or for more information on upcoming activities please contact:

Mr. Thomas McClurg: mcclurg@iciuk.org

 

Vietnam:

ICI Vietnam has completed preparing their trainer team, studying the teaching materials, and translating the material into Vietnamese. ICI Vietnam has also hosted their first CICS exam and is currently completing the process to certify their first CICS and CICP professionals. For more information on upcoming activities in Vietnam please contact: NGUYEN THANH TUNG (MBA. M.Eng, PhD.) Director, FMIT Institute of Financial Management & Information Technology

156 D2 Street, Ward 25, Binh Thanh District, HCMC, Vietnam.

Office: 848 3803 5020 - 848 3512 9371 - 848 3512 7652

Email: info@fmit.vn 

 

Zimbabwe:

ICI Zimbabwe reports progess in developing their programs and plans to start running programs.  

For information on other activities being planned please contact Mr. Proctor Nyemba at: admin@internalcontrolinstitute.co.zw

 

Internal Control Center of Excellence at Saint Petersburg College:

The ICI "Certification Series" has been completely updated and is avaliable online to everyone around the world!

Course content prepares individuals to design and/or assess internal control and to assist management in installing internal control processes. In addition, the series prepares candidates for the Certified Internal Control Specialist (CICS) Examination. For Information or to registar for one or all of the online training programs visit: http://www.spcollege.edu/ct/ici.html 


Infogix Certified Controls Analyst:

Professionals and employers alike will benefit from validation of their level of expertise."To learn more about the ICCA or ICCD certification programs, visit the Infogix University website now at www.infogix.com/certify! Co-sponsored by the Internal Control Institute

Internal Control Chatter
Each month the staff ot The Internal Control Institute reviews hundreds of articles related to Internal Control and Corporate Governance. Here are brief summaries of some of the top articles (along with links to the original article) that may be of interest to you.

2014 Sarbanes-Oxley Compliance Survey

protiviti.com

June 2014

It's been 12 years since passage of the Sarbanes-Oxley Act and, depending on the organization, approximately a decade that companies have been required to comply with the internal control over financial reporting standards as set forth in SOX Section 404. Yet, the playing field continues to change.

View Highlights of Protiviti's 2014 Sarbanes-Oxley Survey 

Five Lessons for businesses from the latest fraud statistics

continuitycentral.com

June 2014

Organizations around the world lose an estimated 5 percent of their annual revenues to occupational fraud, according to a survey of Certified Fraud Examiners (CFEs) who investigated cases between January 2012 and December 2013. Applied to the estimated 2013 Gross World Product, this figure translates to a potential total fraud loss of more than USD 3.7 trillion. Based upon the findings in its 2014 Report to the Nations on Occupational Fraud & Abuse, the Association of Certified Fraud Examiners (ACFE) presents five of the top lessons business owners, directors and managers should heed to be better protected from the risk of fraud:

 

Click here to see the Five Top Lessons 

 

The 2014 Report to the Nations on Occupational Fraud & Abuse includes data compiled from 1,483 cases of fraud submitted by CFEs globally. 

The COSO effect: How the new control framework adds value, not just work for work's sake

By Jayne Gest 

sbnonline.com

June 1, 2014

Every business, private and public, has a control structure. Internal controls - often called COSO after the Committee of Sponsoring Organizations that has set the standard for internal controls since 1992 - are the functional steps that process accounting transactions generated by a business. Every company wants to profit by providing a product or service, and therefore, transactions must be initiated and recorded. The internal controls are the baseline framework to execute that. "The current business environment is highly automated and global with more of a remote workforce and increased transparency. So, those kinds of activities needed to be reflected in the COSO framework," says Alyssa G. Martin, a partner in Risk Advisory Services at Weaver. "This framework that we are all 'supposed to follow' was essentially stale. It wasn't a reflection of the real business environment today." COSO recognized that migration by releasing an updated framework last year.

Read the Article 

Enforcement Case Shows SEC's Increased Focus on Internal Controls
By Linda L. Griggs and Sean M. Donahue

natlawreview.com

June 2, 2014

The SEC recently announced the settlement of charges against DGSE Companies Inc. and its former CFO for accounting fraud resulting primarily from his manipulation of the company's accounting for inventory. DGSE disclosed in April 2011 that it had a material weakness in its internal control related to account reconciliations associated with inventory, depository accounts, and intercompany accounts as of December 31, 2010 and that it had restated its financial statements for the quarters ended June 30 and September 30, 2010 in order to adjust the amounts of customer deposits, accounts payable, and inventory. The DGSE case is another example of the SEC's increased focus on accounting fraud and internal control over financial reporting.

Read the Article 

Many Companies Slow to Implement 2013 COSO Framework
by Jason Bramwell 

accountingweb.com

June 4, 2014

Companies are taking their time transitioning to the 2013 Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control-Integrated Framework, even though the updated guidance is set to take effect after December 15, 2014. According to a new survey from global consulting firm Protiviti, Keeping Pace with SOX Compliance: COSO, Costs and the PCAOB, 48 percent of the 650 audit executives and professionals surveyed reported that their organization had not yet applied the new framework to their key controls as of the first quarter of 2014.

Read the Article 

First Supreme Court SOX decision extends whistleblower coverage

By Kevin B Leblang and Robert N Holtzman

lexology.com

June 4, 2014

In Lawson v FMR LLC(1) the Supreme Court held that the whistleblower provision of the Sarbanes-Oxley Act 2002 (SOX) extends to employees of contractors of public companies, such as accounting firms, mutual fund investment advisers and other privately held companies that provide services to public companies. This is the first Supreme Court decision interpreting the whistleblower provision of the act....the Supreme Court's decision has vast implications for the perhaps millions of private companies that provide contracting services to public companies. Employers which do business with public companies must familiarize themselves with their obligations and potential liabilities under the whistleblower protections of SOX and implement or assess their whistleblower policies and practices.

Read the Article

Mapping a Smooth Transition to COSO 2013

By Darren Heffernan

business2community.com

May 22, 2014

An organization that is little known outside of finance and accounting departments is making a big impact on public companies with the release of a new compliance framework. Fortunately, automated tools remove much of the risk - and organizational headaches - of adapting to these changes. COSO, or the Committee of Sponsoring Organizations of the Treadway Commission was formed almost 30 years ago to sponsor the National Commission on Fraudulent Financial Reporting. It was charged with providing guidance on internal and external controls for public organizations and business management. As business evolves, so do COSO's guidelines, as they did with the introduction of a new COSO framework in 2013. Such transitions can create risks if they are not implemented correctly. Using an automated solution to incorporate the changes removes much of the burden and risk of the transition, allowing companies to remain focused on their business.

Read the Article 

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