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Control Chatter                                                     February 2014
News that Control Professionals Need to Know


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In This Issue
Chairman's Corner
ICI Announcements and affiliate news
COSO Thought Paper
Accounting Fraud on the Rise at U.S. Companies
Can you draw a perfect score in the accounting game?..
Questions for the Audit Committee
2014 Fraud Prevention:
Improving Cybersecurity
Elastic "Internal Controls"
Corporate Governance:
Help Keep Everyone Informed
FREE Assessments
Chairman's Corner   

WHAT IS MORE IMPORTANT -- CONTROLS OR DOCUMENTS ?

William E. Perry
William E. Perry
Chairman Emeritus
Internal Control Institute

I was involved many years ago in the decision to accept electronic documents as legal documents. Computers today generate documents which are used instead of paper documents. Bernard Madoff used these electronic documents to mislead auditors, An auditor from KPMG demanded to see detailed trading logs to confirm the firm was actually engaging in the trading it was documenting on customer statements. These logs we electronic logs. A Madoff employee called the firm's computer technicians in front of the auditor and asked them to send him quickly the information the auditor had requested. The computer technicians rushed to manufacture the fake records which were given to and accepted by the KPMG auditor..This fraud raises the question as to whether or not an auditor can accept a computer printout without evaluating the controls over producing those computer printouts. In my opinion the printouts should not be accepted unless the assessment as to the adequacy of controls over those printouts had been determined.. I believe without adequate computer controls what Madoff's firm did could easily be repeated over and over again. Most auditors do not have the skills to properly evaluate both management and application internal controls without extensive internal control skills. We at ICI believe auditors should either acquire those skills, or work with an internal control specialist to assist them in evaluating internal controls

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: 

 

Brazil:

NEW CLASS FOR INTERNAL CONTROL V - INTENSIVE TRAINING FOR SPECIALIST IN INTERNAL CONTROLS CICS. Registrations are now open for the new class of the training and certification of specialists in internal controls program, which will take place during week of March 31 to April 4, in the city of S�o Paulo. See the comments of some professionals who participated in our courses on our profile! 

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: 

There were several CICS training courses and examinations held during the last quarter of 2013. Training courses and examinations were held in Changsha, Shenzhen, Guangzhou,and Beijing. Congratulations to all the successful candidates.

Looking ahead to 2014, CICS training courses and exams held by CCSIT will be in April, July
and November. The two postponed courses are as follows: 

A. CICS (Guangzhou) training course was held on February 25-28, and the CICS exam
was held on Feb. 28, 2014. 

B. Changsha CICS  training course (the second period) planed to be held in Jan.
10-12 is postponed to March 21-23, 2014.    

Individuals or companies interested in internal control training and Certification should contact Mrs. Zhang Yu 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: 13801316335

 

Europe: 

ICIB held it's first 2014 CICS exam on Thursday January 9th. 

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@gmail.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 is planning to organize a new session of CICS Courses in the period 24 - 28 March 2014.

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/

 

UK and Ireland:

ICIUK reports membership ICIUK and their group on LinkedIn has seen encouraging growth and they look forward to the opportunity of to serving the internal control traning and certification needs in the United Kingdom; including England, Wales, Scotland, Northern Ireland, Isle of Man, Channel Islands and the Republic of 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.  They plan to conduct their first Internal Control Institute workshop in February under the   heading "INTERNAL CONTROL - PRINCIPLES, TERMS & CONCEPTS on the 27th - 28th of February 2014i.

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.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has issued a thought paper that examines how the application of the COSO frameworks can improve an organisation's performance and governance.

iasplus.com

Feb 11, 2014

COSO has two frameworks, the Internal Control - Integrated Framework (2013) and Enterprise Risk Management - Integrated Framework (2004). These frameworks provide guidance on effective controls and proficient risk management. This paper integrates concepts from the COSO frameworks with a general business model and describes how applying key elements of the COSO frameworks can enhance the governance, strategy setting, and management processes.For more information, see the press release and Thought Paper, Improving Organizational Performance and Governance: How the COSO Frameworks Can Help, on COSO's Web site.

Read the Press Release 

Read the Thought Paper 

Accounting Fraud on the Rise at U.S. Companies

BY MICHAEL COHN

accountingtoday.com

FEBRUARY 19, 2014

More than half of U.S. organizations that experienced fraud in the past two years reported an increase in the number of occurrences, according to a new survey by PricewaterhouseCoopers that also found a rise in accounting fraud, bribery and corruption, with cybercrime moving to the forefront of U.S. companies' concerns. PwC US found a continuing upward trend in the occurrence and detection of economic crime, according to the Global Economic Crime Survey 2014 that the firm released Wednesday. Forty-five percent of organizations in the U.S. reported that they suffered from some type of fraud in the past two years, more than the global average of 37 percent.

Can you draw a perfect score in the accounting game?

BY KEN TYSIAC

journalofaccountancy.com

FEBRUARY 18, 2014

More than 1,000 questions inspired by content in accounting textbooks are featured in a new online game created for high school students. The AICPA helped develop the game, called "Bank On It," which is available at startheregoplaces.com. The game is intended to be a fun, engaging way for educators to reinforce the accounting principles being taught in class while giving their students a taste of real working-world scenarios in the accounting profession. 

Read the article and see if you can get all the answers correct?

Questions for the Audit Committee to Ask the External Auditors in Early 2014

By Norman Marks

business2community.com

February 21, 2014

Audit Committees around the world should be concerned by the findings of the regulators who audit the firms in the US (the Public Company Accounting Oversight Board, or PCAOB). They examine a sample of the audits by the firms of public companies' financial statements and system of internal control over financial reporting. A report is published for each firm and an overall report is also published every few years. In their October 24, 2013 Staff Alert, the PCAOB highlighted "deficiencies [they] observed in audits of internal control over financial reporting". They reported that "firms failed to obtain sufficient audit evidence to support their opinions on the effectiveness of internal control due to one or more deficiencies". In addition, in a large majority of the audits where there were such deficiencies, "the firm also failed to obtain sufficient appropriate evidence to support its opinion on the financial statements".

Read the Article 

Read the Practice Alert 

2014 Fraud Prevention: 2 Key Steps

By Tracy Kitten  

bankinfosecurity.com

February 22, 2014  

Two critical steps that banking institutions need to take in 2014 to help prevent fraud are implementing big data analytics and adopting far more sophisticated customer and employee authentication, says Gartner analyst Avivah Litan. Big data analytics can help banking institutions more quickly detect early signs of fraud, says Litan, a financial fraud expert and distinguished analyst for consultancy Gartner Research. "We have so many more attack vectors than we used to have. But big data analytics allows companies to get their arms around their data much faster than ever before."

Read the Article 

U.S. offers companies broad standards to improve cybersecurity

BY   Alina Selyukh    

reuters.com

Feb 12, 2014 

The U.S. government on Wednesday released the final version of standards meant to help companies in nationally critical industries better defend against cyber attacks, and officials now face the challenge of getting the private sector to adopt the voluntary measures. Criticized for being too vague and toothless, the so-called cybersecurity framework turned a vast amount of industry input into guidelines designed for 16 different sectors whose disruption could be devastating to the country, such as food and agriculture, energy or transportation systems.  The framework, drafted by the nonregulatory agency in consultation with thousands of industry experts, offers broad benchmarks for companies to measure the effectiveness of their cyber defenses.

Read the Article 

The SEC's Enforcement Of An Elastic "Internal Controls" Requirement

by Michael Volkov 

jdsupra.com

2/14/2014

The SEC knows that it has broad enforcement authority.  In the FCPA arena, the SEC has civil authority over bribes, but more importantly, enforcement authority over books and records and internal controls.  It is this latter concept - "internal controls" which can be stretched and used against companies and individuals in some pretty bizarre ways. Relying on the authority of an internal controls investigation, the SEC is free to roam around every part of a company's operations to determine if the so-called controls are effective.  This can be a license to keep a company under investigation for years.

Read the Article 

Corporate Governance: SEBI vs Companies Act, 2013

thefirm.moneycontrol.com

Feb 15,2014 

Effective October 1st - all public listed companies in India will be held to higher corporate governance standards! In its Board meeting this week, market regulator SEBI approved a variety of proposals to amend the Listing Agreement. One of these proposals is brand new - the compulsory creation of a whistleblower mechanism. That's a big one and SEBI has done what our parliament has failed to do all these years. But most of the proposals approved by SEBI's Board - align SEBI's corporate governance requirements to those in the Companies Act 2013 

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The Internal Control Institute™ (ICI) a worldwide organization  devoted exclusively to internal control and corporate governance. The Institute is dedicated to the developement world-class educational programs and best practice guidelines on internal control and corporate governance based on the Sarbanes-Oxley Act and the COSO internal control framework.  Visit us on the web at the Internal Control Institute
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Control Chatter is a monthly news summary of the top stories concerning internal control and corporate governance.  Control Chatter is prepared by the staff of Internal Control Institute for the benefit of their members and associates. Please consider it for your personal use or pass it on to associates who may have an interest in one or more of the topics by clicking on the Forward email button below.