Transcript Department of Treasury Services

Introduction to the Investigative
Audit Services Group
Internal Audit’s Responsibility
Develop an annual audit plan based upon a
system-wide risk assessment process;
 Conduct audits in support of the plan;
 Investigate fraud or fraudulent actions;
 Report results to the Board of Regents, the
Chancellor, and the Chief Executive Officers;
and
 Coordinate audit efforts with external and state
auditors

System Internal Audit Department
Organization Chart
12/6/06
Chief
Auditor
Cathy Smock
Inv estigativ e Unit
M anager
Staff
Assistant
Leigh Lobello
Director
Director
(Agencies & Regional
Universities)
(TAMU, HSC, &
SAGO)
Staff
Assistant
Administrativ e
Assistant
Dick Dinan
Charlie Hrncir
Lessie Koester
Judy Stovall
Robin Woods
Sr. Inv estigativ e
Auditor
Debi Fincher
Sr. Inv estigativ e
Auditor
Mark Dickerson
Internal Audit
Managers
Internal Audit
Managers
Mark Poehl
Amanda Jenami
Bill Williams
Brian Billington
Amanda Dotson
David Maggard
Sandy Ordner
Auditors
Aliza Dirden
Deedra Jacob
Nora Miles
T om Miller
T racey Sadler
Kim Pekar
Christy Jurney
Holly Blue
Kimberly Rutledge
Chris Powell
Auditors
Lori Ellison
Katina Greenlee
Mark Heslip
Susan McGrail
Darwin Rydl
Deidra White
Katie Rannebarger
Madelyn Galloway
Joseph Mitchell
Administrativ e
Secretary
Part Time
Penny Scott
Governor’s Executive Order RP-36 Preventing,
Detecting & Eliminating Fraud, Waste & Abuse
Each state agency shall develop a Fraud
Prevention Program that includes the following
components:
Culture of Honesty and Ethics
 Antifraud Processes and Controls
 Appropriate Oversight Processes

Culture of Honesty & Ethics
 Ethics
Policy
 Fraud Policy
 Ethics Training
 Hotline for employees to report wrongdoing
 Separate investigative group to review
reports of wrongdoing
 Thorough investigations conducted for
allegations of fraud with disciplinary action
taken against violators.
Antifraud Processes & Controls
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Internal Audit prepares a System-wide risk assessment
as part of the annual audit planning process
Fraud Policy states that CEOs have primary
responsibility for identifying areas of risk
Internal Audit utilizes ACL to test for anomalies in
financial data
System members utilize positive pay system with banks
to detect fraudulent checks
Management tracking report for all audit
recommendations
Appropriate Oversight Processes
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Board of Regents is very active in addressing control
issues identified in audits and investigations
Board of Regents approves the annual audit plan
Chief Auditor meets regularly with Committee on
Audit
Committee on Audit reviews the audit tracking report
Management
A&M System Policy 07.01, Ethics
All A&M System employees are expected
to adhere to the highest of ethical
standards and principles. These
standards and principles are set forth in
the A&M System Ethics Policy.
A&M System Policy 21.04, Control of
Fraud & Fraudulent Actions
Every employee is responsible for
reporting factual information suggestive
of illegal, improper or dishonest acts
and/or practices that may involve the
A&M System or one of the System
members.
Fraud or Fraudulent Actions
 Theft
 Embezzlement
 Kickbacks
 Travel
reimbursement schemes
 Falsification of government documents
 Misappropriation/misuse of property
 Conflicts of Interest
Methods of Detecting Fraud in
Governmental Agencies
 Tip
39%
 Internal Audit
20%
 Internal Controls 20%
 By Accident
16%
 External Audit
15%
 Police Notification 7%
Association of Certified Fraud Examiners 2006 Annual Report to the Nation
The sum of percentages exceeds 100% because some respondents identified more than one method.
Report Fraud To
 Immediate
supervisor
 Agency/University Chief Executive
Officer
 The A&M System Fraud, Waste & Abuse
Hotline (reports are anonymous)
 The State Auditor’s Fraud, Waste &
Abuse Hotline (reports are anonymous)
What Happens Next
 Notification
of Agency/University Chief
Executive Officer
 Investigative Group reviews applicable
documentation & conducts interviews as
necessary
 Chief Auditor issues report of review
findings
 Management takes corrective action if
necessary
Reporting Process
 Report
will identify possible criminal
violations, as well as policy violations &
significant control weaknesses
 Draft
report reviewed with management if
necessary prior to being issued
 Management
required to provide a written
response of corrective actions to be taken
with regard to policy violations & control
weaknesses
 Summary of investigations is provided to
the Board of Regents annually
Complaints Received
Allegation Type
Fiscal Year
2005
Fiscal Year
2006
Misappropriation of funds
11
6
Misuse of resources (computers,
vehicles, etc.)
26
30
Theft of time
5
1
Falsification of documents
3
8
Contract/bid irregularities
2
6
Conflict of interest
5
4
Counterfeit cash or checks
2
-
Management Issues
10
16
-
1
64
72
Failure to investigate hazing
Total
Investigative Report Findings
Final Report Conclusion
Number of Incidents
Fiscal Year 2005
Number of Incidents
Fiscal Year 2006
Criminal Acts
2
5
Policy Violations
13
7
Internal Control Weaknesses
16
24
No Issues Identified
27
42
Total
58
78
Common Themes in Identified
Control Weaknesses:
 No
Segregation of Duties
 Lack of Reconciliations
 Lack of Documentation
 Lack of Management Oversight
Segregation of Duties
 An
employee performs every step in a
particular process:
• Authorizes purchases, receives invoices,
prepares vouchers/approves payment,
deposits funds, processes reconciliations
 Important
in A/R, A/P, Working Funds
Reconciliations
 To
check a financial account against
another for accuracy
 Perform periodically and independently
to verify the account balances
Documentation
 Ensuring
contracts exist which authorize
work and payments
 Is there enough information on the
invoice to confirm what is being
purchased?
 Did someone physically inventory or
confirm deliverables?
Management Oversight
 Do
you know the duties of your
employees?
 Is there management approval for
purchases, including travel and
reimbursements?
 Ultimately, the responsibility rests with
management - “Tone at the Top”
Contact Information
SIAD Phone:
979.458.7100
Hotline:
888.501.3850
Website:
www.tamus.edu/offices/iaudit/
SAO Website: www.sao.state.tx.us/SIU
Email:
•Robin Woods
[email protected]
•Debi Fincher
[email protected]
•Mark Dickerson
[email protected]