Individual Post
Enhancing Asset Protection through an adequate monitoring of internal control system by internal audit.
By
Danique Channer (ID # 0908607 SOBA)
November 12, 2012
Lecturer: Ms. Simone Bewry
Summary of Article
Since the start of the global economic recession there has been a reduction in the ablity of organization’s to acquire assets for business operations therefore increasing the need for asset protection against fraud. Studies have shown that the most effective way to provide for the protection of these assets is to ensure the organization has a strong internal audit function to assist management in fighting against this fraud. Even though many companies have an internal audit function and internal control established there has still been an increase in the number of reported cases of fraudulent misstatement of assets. In order to reduce the misstatement of assets, a monitoring of the internal controls is necessary and the internal auditors need to be directly involved in assessing and monitoring internal controls. Misstatement of assets may occur in more complex and worsening ways and so management integrity and attitude towards subordinates is also essential especially since managers have the responsibility of detecting fraud. Managers need to be aware of pressures, opportunities and rationalizations that may lead an individual to commit fraud. Thus managers are responsible for taking a proactive approach to addressing fraud by building a database of fraud scenarios. Improvement of the already instituted controls can also prevent them from being out of date and inappropriate.
Identify five internal auditing issues mentioned in the article
1) Lack of proper segregation of duties - If one person is responsible both for maintaining the records of the asset and the asset itself, there are may be many opportunities for procrastination, abdication of tasks and theft.
By
Danique Channer (ID # 0908607 SOBA)
November 12, 2012
Lecturer: Ms. Simone Bewry
Summary of Article
Since the start of the global economic recession there has been a reduction in the ablity of organization’s to acquire assets for business operations therefore increasing the need for asset protection against fraud. Studies have shown that the most effective way to provide for the protection of these assets is to ensure the organization has a strong internal audit function to assist management in fighting against this fraud. Even though many companies have an internal audit function and internal control established there has still been an increase in the number of reported cases of fraudulent misstatement of assets. In order to reduce the misstatement of assets, a monitoring of the internal controls is necessary and the internal auditors need to be directly involved in assessing and monitoring internal controls. Misstatement of assets may occur in more complex and worsening ways and so management integrity and attitude towards subordinates is also essential especially since managers have the responsibility of detecting fraud. Managers need to be aware of pressures, opportunities and rationalizations that may lead an individual to commit fraud. Thus managers are responsible for taking a proactive approach to addressing fraud by building a database of fraud scenarios. Improvement of the already instituted controls can also prevent them from being out of date and inappropriate.
Identify five internal auditing issues mentioned in the article
1) Lack of proper segregation of duties - If one person is responsible both for maintaining the records of the asset and the asset itself, there are may be many opportunities for procrastination, abdication of tasks and theft.