HELP US IMPROVE INTERNAL CONTROL SYSTEMS WORLDWIDE
PARTNERS WANTED:
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. 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: [email protected] or by phone at 727-538-4113in the USA.
The Internal Control Institute has developed a CICS Common Body of Knowledge Mini-Assessment that helps an individual determine their knowledge as it relates to governance and control practices. Results point out areas of knowledge that may require additional training and experience. The assessment also provides a measurement to the individual's readiness for CICS certification. The assessment measures core knowledge in eight critical areas including: Internal Control - Principles, Terms and Concepts, Internal Control Environment, Risk Management, Assessing Application Controls, Business System Control Assessment, Risk Assessment, Internal Control Measurement and Reporting, and Governance Practices
Start becoming an Internal Control professional today!
The ICI "Certification Series" has been completely updated and is available 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.
Online course pricing has been reduced by over 70%
Internal Control and Process Failures
By Michael Pregmon, Jr., Ph.D., CICP
Dr. Michael Pregmon, Jr.
COO and Managing Director
In previous editions of this newsletter, we began a series of articles addressing the issue that poor internal control perpetuates inconsistent customer service. Inconsistent customer service causes irritating customer dissatisfaction. And, this persuades customers to leave. We further concluded this often results from three typical organization flaws. These are:
Organization structure weakness
Process control failures
Staffing challenges
In this edition, we will address the issue in the second item above, namely, process control breakdowns.
Process Control Failure
Good process control is an absolute necessity to insure first-rate internal control. These two activities work "hand in hand." Effective Internal control cannot be attained without good processes that are continually followed. When processes are not followed, this causes an internal control breakdown. This usually occurs because of:
1. Poor training
2. Lack of supervision
3. Poor processes
4. No established process for the activity
Poor or ineffective training is typically the most frequent culprit. So often, organizations rely on "shadow" training as the primary and sole method to accomplish training. This is a fallacy! If the employee, providing the training example, uses poor techniques or practices, these are passed on to the new associate. And potentially, those poor examples are further spread to others at a later time. Ironically, in instances where shadow training is the only method used, this intones that staffing levels are insufficient and the organization can not afford the necessary time for proper training. This item will be further covered in our next newsletter.
Lack of supervision is essentially a result when organizations fail to recognize the value of leadership. This causes a significant loss of productivity/dollars whereby organizations fail to realize. This too will be covered in more detail in the next newsletter edition. Suffice to note, that process control is ineffective without process leadership/management.
Employees will not use poor processes. If a process is poorly designed or developed, employees will avoid using the process to get the job done. This is a fact!
Ironically, many businesses fail to devise or formally install needed processes. This often causes a "sure-fire" customer relations failure. Here is a real-life, business example of a customer/resident service problem:
This business's building in this case is truly a "world-class" quality. It is operating in the health care industry as an assisted living facility (ALF). And having been recently built, technologically, it is well equipped. To conserve space, the building was constructed with a tankless water heating system. With this system, relatively little or no hot water storage is available. This obviously is an efficient building design strategy. However, the activity is located in Florida where frequent electrical storms are prevalent. A brief power surge or failure during a storm activates the water heater's electrical circuit breaker and ceases water heating until a reset is activated.
This is where a designed process to control an activity is absolutely essential.
Time and again residents of this facility are without hot water. Invariably, power surges often occur in the evening or on weekends when management/leadership personnel are not available to reset the circuit breaker. If a process was installed and followed whereby a shift leader checks the circuit breaker each shift, this would eliminate this absurd customer/resident service dissatisfaction. Certainly, a reliable process would avoid additional costs in reengineering the system. But without an effective process, early morning bathing is often verboten.
How is your (hot water) process control?
ICI ANNOUNCEMENTS
ICI Affiliate News:
ICI WELCOMES NEW PARTNER
ICI has entered into an agreement with the Chartered Institute of Audit Governance Oversight and Leadership a company duly organized under the laws of the Republic of South Africa (CIAGOL-SA ("CIAGOL-SA") will represent ICI for all Products, Services and Internal Control Certifications (CICS/CICP) in this territory. CIAGOL-SA will be responsible for all development activities in this area, including professional training and Certification. Individuals or companies interested in internal control training or Certification should contact:
The Internal Control Institute is conducting certification training in a classroom and online formats for the internationally recognized CICS (Certified Internal Control Specialist) certification in internal control. Information on these programs regarding dates and schedules can be found on the Events tab on our Website (Events) or directed to the affiliate named below:
Botswana:
ICI has entered into an agreement with Internal Control Institute of Botswana (ICI Botswana":) as its representative for Products, Services and Internal Control Certifications (CICS/CICP) in this territory. ICI Botswana will be responsible for all development activities in this area, including professional training and Certification. Individuals or companies interested in internal control training or Certification should contact:
ICI has entered into an agreement with Internal Control Institute of Cameroon ("ICI Cameroon") as its representative for Products, Services and Internal Control Certifications (CICS/CICP) in this territory. ICI Cameroon will be responsible for all development activities in this area, including professional training and Certification. Individuals or companies interested in internal control training or Certification should contact:Contact: Eric Kamegne
Better Business Governance - APAC PTE LTD (BBG) has become a representative for Products, Services and Internal Control Certifications (CICS/CICP) in Myanmar and Cambodia. Better Business Governance will be responsible for all development activities, including professional training and Certification. For more information on upcoming activities in this area please contact:
The CICS exam is now being provided in Arabic. Osool Training and Consulting has courses and testing available in Egypt, Jordan, Libya, Muscat, Sudan, Qatar, the United Arab Emirates, Kuwait and Palestine.
Training Plans:
18 - 22 October 2020 - Amman, Jordan
25 - 29 October 2020 - Tunis, Tunisia
27 - 31 December 2020 - Dubai, United Arab Emirates
Interested applicants in the region should contact Osool for scheduling for future programs. For additional information on scheduled ICI Certification and program sessions, please contact:
ICI has entered into an agreement with GRC Consultancy Pte Ltd. (ICI Singapore, Malaysia, Indonesia and Taiwan) as its representative for Products, Services and Internal Control Certifications (CICS/CICP) in those territories.
Individuals or companies interested in internal control training or Certification should contact:
ICI has entered into an agreement with Business and Financial Consulting company in the Republic of Tunisia (hereinafter referred to as "ICI BFC" as its representative for Products, Services and Internal Control Certifications (CICS/CICP) in the Republic of Tunisia. ICI BFC will be responsible for all development activities in this area, including professional training and Certification. Individuals or companies interested in internal control training or Certification should contact:
On Saturday and Sunday 08:30 am - 12:00 am 13:30 pm - 17:00 pm
10/10/2020
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, Level 5, 126 Nguyen Thi Minh Khai Street, Ward 6, District 3, HCMC, Viet Nam
Each month the staff of 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.
Using AI to identify public sector fraud
globalbankingandfinance.com
October 26, 2020
When it comes to audits in the public sector, both accountability and transparency are essential. Not only is the public sector under increasing scrutiny to provide assurance that finances are being managed appropriately, but it is also vital to be able to give early warnings of financial pressures or failures. Right now, given the huge value of funds flowing from the public purse into the hands of individuals and companies due to COVID measures, renewed focus on audit is essential to ensure that these funds are used for the purposes intended by parliament.As Rachel Kirkham, former Head of Data Analytics Research at the UK National Audit Office and now Director of AI Solutions at MindBridge, discusses, introducing AI to identify and rectify potential problems before they become an issue is a key way for public sector organisations and bodies to ensure public funds are being administered efficiently, effectively and economically. The National Crime Agency has warned repeatedly that criminals are seeking to capitalise on the Covid crisis and the latest warnings suggest that coronavirus-related fraud could end up costing the taxpayer £4bn.
On October 21, 2020, IMA (the Institute of Management Accountants), the global organization of finance professionals of which I am CEO, will observe the seventh annual Global Ethics Day (an observance established by the Carnegie Council for Ethics in International Affairs) amid global distrust in business and other societal institutions. The 2020 Edelman Trust Barometer, a quantitative measure of public trust, finds global trust levels in business are at 58%, relatively flat year over year. But it means in aggregate, 40% of the citizens in the 28 countries that comprise this index distrust business. Inequality of economic outcomes and fear for the future underlie this distrust, according to Edelman's research. CFOs have an important role to play in re-establishing and maintaining trust in business because finance is ultimately responsible for protecting stakeholders' interests, including shareholders, employees and society at large.
When finance walks back from these responsibilities, doors that lead to fraud or financial malfeasance open. That is why finance owns risk management and internal controls. Every business and operating decision benefits from the holistic lens finance brings to the picture, and effective internal controls are good for business.
Goldman Sachs Pleads Guilty to $1 Billion Bribery Scheme Charges
A Malaysian subsidiary of Goldman Sachs pleaded guilty Thursday to charges in a scheme to pay more than US$1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business. Goldman Sachs pleaded guilty to bribery, money laundering scheme charges. (Photo: giggel (CC BY 3.0))The charges address Goldman Sachs' role in underwriting approximately $6.5 billion in three bond deals for the 1Malaysia Development Berhad (1MDB fund), for which the bank earned hundreds of millions of dollars in fees.
The guilty plea was part of a coordinated resolution between the New York-based global financial institution and criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere in which the bank agreed to pay a settlement of more than $2.9 billion, the U.S. Justice Department (DOJ) stated.
We continue our exploration of The Goldman Sachs Group, Inc. (Goldman Sachs) Foreign Corrupt Practices Act (FCPA) settlements and related enforcement action, literally across the globe, from the state of New York to Singapore, Hong Kong, Malaysia and United Kingdom. Harry Cassin, writing in the FCPA Blog, said, "Goldman Sachs Group Inc. shattered our top ten list with a $3.3 billion FCPA settlement with the U.S. Department of Justice and Securities and Exchange Commission, sending it straight to number one. In last week's settlement, the DOJ imposed a $2.3 billion criminal penalty, and the SEC imposed a civil penalty of $400 million and disgorgement of $606.3 million."Today, I want to focus on the internal control failures which lay at the basis of the Securities and Exchange Commission (SEC) Cease and Desist Order (the "SEC Order").
Why the Foreign Corrupt Practices Act Continues to be the Most Successful Mechanism Available to Fight Corruption.
By Maraya Best
natlawreview.com
October 27, 2020
Corruption has severe damaging effects on democratic institutions, undermining public accountability and diverting public resources from important priorities such as health, education, and infrastructure. As stated by former Secretary-General of the United Nations, Kofi Annan, on the passage of the United Nations Convention Against Corruption: Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish.Essentially, if left unchecked, corruption becomes more than just an economic or international development issue, it begins to threaten basic human rights.
J&F Investmentos SA ("J&F), a Brazilian private investment company, plead guilty to FCPA bribery violations in federal court in Brooklyn, New York. As part of the plea agreement, J&F agreed to pay a fine of $256 million and to cooperate with ongoing investigations of other companies and individuals involved in the bribery schemes. J& F owns numerous companies around the globe, including in the meat and agricultural industries.
Last Wednesday, J&F Investimentos S.A. and a subsidiary agreed to pay a total of $285 million to settle FCPA charges brought by the SEC and DOJ. With that settlement, the Foreign Corrupt Practices Act hit its two biggest milestones yet.
The first milestone: 2020 has officially become the largest year ever for FCPA settlements, with resolutions worth $2.94 billion. Falling to second place is 2019, with total settlements valued at $2.9 billion. So far in 2020, there have been nine FCPA corporate settlements, compared to fourteen in 2019. The second milestone: The J&F settlement pushed total FCPA penalties - since the Act's inception in 1977 - to over $20 billion. About 90 percent of that amount is attributable to enforcement actions over the last ten years.
Last month, the Commodity Futures Trading Commission ordered JPMorgan Chase & Company and its subsidiaries to pay a total of $920.2 million for artificially manipulating market prices of precious metals by sending false signals to other market participants. This spoofing settlement is the highest monetary relief ever imposed by the CFTC. But is it just another high-dollar settlement in what has become a pattern of recidivism over the last decade? JPMorgan Chase has entered multiple pre-trial agreements with the Department of Justice. After admitting to being a part of the Bernie Madoff Ponzi Scheme in 2014, it paid a $1.7 billion settlement as part of a DPA. And in 2016, it paid $264 million as a part of an NPA to settle FCPA charges.
PPC's independent auditor Deloitte has issued an unprecedented highly critical report that highlights "material weaknesses in internal controls over financial reporting" as one of several key audit matters that need to be addressed by the JSE-listed cement and lime producer. Deloitte confirmed in its independent auditors' report, which formed part of PPC's financial results statement for the year to March 2020 released earlier this month, that its external audit confirmed that there has been "a material breakdown in internal controls over financial reporting". "In particular, severe gaps in controls over financial reporting, such as the consolidation process, the preparation and review of the annual financial statements and the completeness and accuracy of information, were identified," it said.
Honesty and integrity are absolutely essential for success in life - all areas of life. The really good news is that anyone can develop both honesty and integrity. Zig Ziglar
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The Internal Control Institute™ (ICI) is a worldwide organization devoted exclusively to internal control and corporate governance. The Institute is dedicated to the development of 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
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.
