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#130288 - 11/12/03 03:39 PM Current External Audit
LinMarie Offline
100 Club
LinMarie
Joined: Nov 2001
Posts: 243
Our external auditors arrived today. They are talking about new FAS 99 which indicates that fraud testing is required for external audits. I do not know anything about this. Can anyone help?


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#130289 - 11/12/03 03:57 PM Re: Current External Audit
Kansayaku Offline
Diamond Poster
Joined: Jan 2003
Posts: 1,454
metsuretsu
SAS 99 gives U.S. auditors expanded guidance for detecting material fraud. Click Here This should explain a bit of it for you.
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#130290 - 11/12/03 04:33 PM Re: Current External Audit
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
The effect that I have seen was a twofold approach. Our external auditors began using these new techniques last year. This first test was a multipage questionnaire for bank management to complete. It asks a multitude of questions regarding risk exposures and if you believe your institution is suceptible to any of them. (Basically it would be a self incriminating report and I feel it is not much of any use except maybe in a large institution.)

Next, the head of the audit team came in and closed the door and did the good ol' "So how are things going really? Do you have any concerns about management or the board? Etc.." This approach allows the bank's auditor to verbally express any concerns they may have about issues that they have dealt with or seen that maybe management decided not to address - but again, self increminating. I know that due to the Sarbanes Oxley and in reacting to all the corporate scandal they felt like they had to try new methodologies, but unless someone REALLY feels like something unethical or illegal is going on in their institution and are willing to forego their job, I don't see this as providing much more insight than they had before.

I think the key is to do more testwork. That is where you find problems.

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#130291 - 11/12/03 08:13 PM Re: Current External Audit
Anonymous
Unregistered

KPMG presented what they are going to do for the Fraud standard at our bank. It is focused on expense reports for Exec officers and AP for vendors.

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#130292 - 11/12/03 09:39 PM Re: Current External Audit
LinMarie Offline
100 Club
LinMarie
Joined: Nov 2001
Posts: 243
Thanks for your responses. I found them very helpful!

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#130293 - 11/14/03 11:14 PM Re: Current External Audit
WildTurkey Offline
Platinum Poster
WildTurkey
Joined: Jan 2003
Posts: 921
Down South, USA
Quote:

..... unless someone REALLY feels like something unethical or illegal is going on in their institution and are willing to forego their job, I don't see this as providing much more insight than they had before. ....



You might not think so, but I disagree. In my experience a few open ended questions can provide some interesting responses.

"Have you ever had a problem with [situation]...." may bring the answer "No", but a little prompting with some possible examples, and/ or a "Not ever?" while looking in to the whites of their eyes has brought some interesting information to light for me on a good number of occasions.

.... Earlier this year I met with a manager in the department I was auditing, and at the end of the meeting he turned to my manager and asked if I had trained as a lawyer!
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This is my opinion; it is not legal advice, nor the view of my employer, and it may change tomorrow.

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#130294 - 11/17/03 06:05 PM Re: Current External Audit
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
All I am saying is that if I were to answer these questions with answers that would cause them to scrutinize areas they had not before or if it was ever suggested to management that I gave them an indication that something wasn't right, the President and CEO would know exactly where this came from.

As I work for a small bank with VERY conservative values it would not bear well with my employment if I provided information that would cause the external auditors to investigate issues that I have directly or indirectly caused to come to light.

Is this right? Are my thoughts about this improper? Maybe. But I know how our executive management thinks and although everything may be on the Up and Up, it would still create a hardship for my position.

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#130295 - 11/23/03 06:41 AM Re: Current External Audit
WildTurkey Offline
Platinum Poster
WildTurkey
Joined: Jan 2003
Posts: 921
Down South, USA
Quote:

All I am saying is that if I were to answer these questions with answers that would cause them to scrutinize areas they had not before or if it was ever suggested to management that I gave them an indication that something wasn't right, the President and CEO would know exactly where this came from. ....



However if there really is something wrong, and it causes a fraud to be perpetrated, (or worse ... ) and it comes to light that you knew, or should have known about the weakness that allowed the fraud/ loss to happen than I wouldn't want to be in your shoes!
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This is my opinion; it is not legal advice, nor the view of my employer, and it may change tomorrow.

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