Cloud computing is beginning to climb its way up the ladder, becoming vastly more popular now that Apple products have become linked to it. However, many people still don't full understand what cloud computing is, and to audit a cloud becomes more of an alien idea if basic information is not known.
So what exactly is a cloud and how can it make people's lives easier? If you can imagine a big empty area in cyber space where people can safely store information to be accessed anywhere, the basics of the cloud are just as simple. Connecting a cloud to an Apple product was a genius idea. Allowing people to automatically save pictures and video to the cloud, and then transferring this data to their home computer put the powerful cloud computing in every one's palms.
The question then becomes, how do you audit something that has no physical presence but protects private and important information? The answer is simple: try to break the controls and force yourself into the cloud. An auditor must make sure that the controls that protect this information are reliable enough to keep away potential hackers.
Auditors must make sure that the cloud cannot be hacked into by an unauthorized person. Password protection and verification of a user is essential in keeping important data from getting into the wrong hands.
The cloud must also be reliable. The information within the cloud is important and needs to be protected, however it must also be available to users 24/7. If a company uses the cloud for data storage, employees will need to access this data at any time during the day. The cloud must be available and running for access to this information.
Another big issue that an auditor faces while analyzing a cloud is to make sure it is cost efficient. Is the cost of the upkeep and maintenance of the cloud worth the hassle of transferring the data for customers and employees to use? If the cost does not meet expectations, then cloud computing may not be right for the business at hand.
Cloud computing has taken off, and doesn't seem to be staggering any time soon. Experts say that cloud computing may be the new storage data of the future. Holding such important information will force users of the cloud to make sure controls are in place to protect the information within. Auditors must adapt to the ever changing technology, and learn new ways to test and audit companies.
Source:http://www.cloudtweaks.com/2012/04/cloud-auditing-making-sure-that-your-cloud-works-per-your-expectations/
Tuesday, April 24, 2012
Sunday, April 15, 2012
ARD Auditing Diamond Lab after Firing Graders
When buying a diamond ring, how do you know that the diamond is as perfect and clear as the price suggests? How do you know that the $14,000 diamond isn't as good as the $3,000 ring in the next case? All diamonds of high quality are graded by certified gemologists who grade diamonds based on the 4 C's: carat, clarity, color, and cut. These gemologists give a certificate for each diamond, knowing what to look for to spot a "bad" diamond or a lower quality diamond. The trust to be accurate lies with these gemologists whom retailers and customers alike rely on the information they produce. Unfortunately, this is not the case at a recent diamond grading lab in Antwerp, the worlds largest diamond trading center.
The Certificates Department of the Antwerp Diamond High Council (HRD), in Belgium has recently announced that there may have been "potential inconsistencies" when grading diamonds through their lab. Due to the strict International Standards Organization (ISO) that overseas the selling and procuring of diamonds, HRD has been having a hard time following the rules. The employees that are suspect of grading diamonds incorrectly have been working for HRD for around eight to eleven years. It is unclear at this time how long these mistakes have been made, all that is known is that there are diamonds that are not being sold at the value they are worth. So far, four graders have been fired, with many suspected to follow.
A forensic audit team will lead the group in finding these mistakes and recommend solutions to fix them. It may be a precaution, but having your diamonds re evaluated may prove if a diamond you bought was mislabeled.
These types of mistakes are often caught at the retail level. Recently, many local jewelers, such as Hanoush Jewelers, have begun the practice of grading all their diamonds a second time. This gives the customer a stronger sense of security, knowing that the diamond they are buying is truly as perfect as they want.
Next time there is a diamond purchase in your future, a suggestion would be to get another grading test done to be sure that it is the right diamond for you. There is no official number of how many diamonds could be suspected of being mislabeled, but taking that extra step to insure that the diamond is the correct grade will put you in a better sense of mind.
The Certificates Department of the Antwerp Diamond High Council (HRD), in Belgium has recently announced that there may have been "potential inconsistencies" when grading diamonds through their lab. Due to the strict International Standards Organization (ISO) that overseas the selling and procuring of diamonds, HRD has been having a hard time following the rules. The employees that are suspect of grading diamonds incorrectly have been working for HRD for around eight to eleven years. It is unclear at this time how long these mistakes have been made, all that is known is that there are diamonds that are not being sold at the value they are worth. So far, four graders have been fired, with many suspected to follow.
A forensic audit team will lead the group in finding these mistakes and recommend solutions to fix them. It may be a precaution, but having your diamonds re evaluated may prove if a diamond you bought was mislabeled.
These types of mistakes are often caught at the retail level. Recently, many local jewelers, such as Hanoush Jewelers, have begun the practice of grading all their diamonds a second time. This gives the customer a stronger sense of security, knowing that the diamond they are buying is truly as perfect as they want.
Next time there is a diamond purchase in your future, a suggestion would be to get another grading test done to be sure that it is the right diamond for you. There is no official number of how many diamonds could be suspected of being mislabeled, but taking that extra step to insure that the diamond is the correct grade will put you in a better sense of mind.
Sunday, April 8, 2012
Charter School Chief Resigns Amid Financial Mismanagement
Money management is the hardest part when obtaining funds. For example, statistics show that most lottery winners end up worse off, financially, then they were before they won the money. This is often due to the fact that these winners do not understand that this money is limited. This scenario often happens to not-for-profit businesses who are faced with massive grants, often around the same time, and must manage the funds throughout the year.
This situation was forced upon chief executive officer of Vialistic Therapeutic Charter School, Nancy Egan. Since 2010, she accuses the board of trustees and other administrations of having undermined her many attempts to fix the money management problems the school was facing. Funds that were specifically granted for additional programs for the students of the school were instead used to pay electricity bills. The lack of funds to pay for basic utilities may have arose from a recent internal audit that brought to light questionable payroll issues. Egan stated, "questionable issues regarding payroll, previously voted-on pay cuts, approved staff hours and pay rate, Capital Blue Cross coverage and issues regarding past-due payables" were found during this audit and were not addressed.
These comments did not come as a surprise. Last year, Vitalistic lost their mental health license after auditors found no evidence that more than $200,000 services billed to the state were actual cases. It seems that this was the tip of the iceberg. Unpaid loans given to the sister preschool were forgiven by Vitalistic. According to the law, charter schools are forbidden to lend money. These problems at Vitalistic are compounding and the only people truly getting hurt are the students.
Currently, the above stated sister preschool has been closed down, and almost half of the staff at Vitalistic have been laid off. The state auditor general is now investigating this school. It seems as if it will only be a matter of time until the school will be closed, leaving hundreds of children with special needs without the resource to help them. This situation needs to be cleared up, and a new management system forced into place.
Source: http://www.mcall.com/news/local/allentown/mc-bethlehem-vitalistic-charter-school-ceo-resign-20120328,0,2966852.story
This situation was forced upon chief executive officer of Vialistic Therapeutic Charter School, Nancy Egan. Since 2010, she accuses the board of trustees and other administrations of having undermined her many attempts to fix the money management problems the school was facing. Funds that were specifically granted for additional programs for the students of the school were instead used to pay electricity bills. The lack of funds to pay for basic utilities may have arose from a recent internal audit that brought to light questionable payroll issues. Egan stated, "questionable issues regarding payroll, previously voted-on pay cuts, approved staff hours and pay rate, Capital Blue Cross coverage and issues regarding past-due payables" were found during this audit and were not addressed.
These comments did not come as a surprise. Last year, Vitalistic lost their mental health license after auditors found no evidence that more than $200,000 services billed to the state were actual cases. It seems that this was the tip of the iceberg. Unpaid loans given to the sister preschool were forgiven by Vitalistic. According to the law, charter schools are forbidden to lend money. These problems at Vitalistic are compounding and the only people truly getting hurt are the students.
Currently, the above stated sister preschool has been closed down, and almost half of the staff at Vitalistic have been laid off. The state auditor general is now investigating this school. It seems as if it will only be a matter of time until the school will be closed, leaving hundreds of children with special needs without the resource to help them. This situation needs to be cleared up, and a new management system forced into place.
Source: http://www.mcall.com/news/local/allentown/mc-bethlehem-vitalistic-charter-school-ceo-resign-20120328,0,2966852.story
Saturday, March 31, 2012
Ex-Bank Exec Settles SEC Suit
An auditor has a tougher job than many people would often think. Much of the information that is processed through an auditor is not easily found. Although it may seem that an auditor's most valuable asset is technology, many would argue that it is the information finished by the employees that is the most valuable. This is why the SEC comes down very harshly when employees give false or misleading information to auditors.
When an auditor goes to a company to perform an audit, they are strangers to the personnel and often times are given only information in which they ask for, but not all the information they need. It is this reason why it is very important that when an employee gives an auditor information, it can be relied upon and used as a reference, because most of the time, the information that is not in the computer is the most crucial.
It is these reasons, referenced above, that the SEC nailed down on San Fransisco-based United Commercial Bank ex-executive John Cinderey. During the financial crisis of 2008, Cinderey allegedly altered memorandum that independent auditors needed. The SEC also accuses Cinderey of delaying the audit and changing policies that caused the audit team to determine the Bank, and its subsidiaries, in an inaccurate light. In Cinderey's defense, he states that he was acting on behalf of his superiors, although this gives him no right to do what he did.
In a settlement, in which Cinderey neither confirms nor denies the allegations, he is permanently banned from any types of bookkeeping. However, he will not be forced to pay a fine or penalty due to the $40,000 penalty he paid in a civil action against him from the FDIC. The courts ruled that this fine is sufficient for the alleged violates he is accused of. The reason he was let off so easily is that he is has assisted the SEC heavily in a similar case and has given personal insight on the related enforcement.
Cinderey is not the only executive from United Commercial Bank or its subsidiaries, that has been accused of securities fraud and misleading auditors. Chief executive officer Thomas Wu, chief operating officer Ebrahim Shabudin, and senior officer Thomas Yu were all accused of such allegations of hiding assets and misleading auditors. This gives a bad reputation to UCB, but shows how important accurate and reliable data can be. With the ever increasing revolutions in technology, it can become even easier to get side tracked, or to be lead astray due to unfamiliar territory, however auditors are faced with this situation with every audit they complete. This is why the consequences of misleading, hiding, or lying to auditors, is severely punishable.
Source: http://inaudit.com/regulatory/sec/ex-bank-exec-settles-sec-suit-16637/;
http://www.sec.gov/news/press/2011/2011-202.htm
When an auditor goes to a company to perform an audit, they are strangers to the personnel and often times are given only information in which they ask for, but not all the information they need. It is this reason why it is very important that when an employee gives an auditor information, it can be relied upon and used as a reference, because most of the time, the information that is not in the computer is the most crucial.
It is these reasons, referenced above, that the SEC nailed down on San Fransisco-based United Commercial Bank ex-executive John Cinderey. During the financial crisis of 2008, Cinderey allegedly altered memorandum that independent auditors needed. The SEC also accuses Cinderey of delaying the audit and changing policies that caused the audit team to determine the Bank, and its subsidiaries, in an inaccurate light. In Cinderey's defense, he states that he was acting on behalf of his superiors, although this gives him no right to do what he did.
In a settlement, in which Cinderey neither confirms nor denies the allegations, he is permanently banned from any types of bookkeeping. However, he will not be forced to pay a fine or penalty due to the $40,000 penalty he paid in a civil action against him from the FDIC. The courts ruled that this fine is sufficient for the alleged violates he is accused of. The reason he was let off so easily is that he is has assisted the SEC heavily in a similar case and has given personal insight on the related enforcement.
Cinderey is not the only executive from United Commercial Bank or its subsidiaries, that has been accused of securities fraud and misleading auditors. Chief executive officer Thomas Wu, chief operating officer Ebrahim Shabudin, and senior officer Thomas Yu were all accused of such allegations of hiding assets and misleading auditors. This gives a bad reputation to UCB, but shows how important accurate and reliable data can be. With the ever increasing revolutions in technology, it can become even easier to get side tracked, or to be lead astray due to unfamiliar territory, however auditors are faced with this situation with every audit they complete. This is why the consequences of misleading, hiding, or lying to auditors, is severely punishable.
Source: http://inaudit.com/regulatory/sec/ex-bank-exec-settles-sec-suit-16637/;
http://www.sec.gov/news/press/2011/2011-202.htm
Friday, March 23, 2012
New York Medicaid Audits Become "Softer"
Corruption within the government has not been a new accusation. For years, people knew, understood, and acknowledged that it wasn't how strong your policies were, but how deep your pockets could go. The deepest pockets of all seemed to always be associated with the medical industry. This multi-billion dollar industry has influenced government and politicians for years, allowing (or not allowing) laws to be passed. It seems that, in New York State, this theory has proven fact.
New York State has the nations largest Medicaid Program, which reaches $53 billion. However, according to a 2005 investigate, thousands of fraudulent cases were missed, that cost New York State billions of dollars. For example, Health Department regulators missed dentists who billed for 991 procedures daily, and nursing-home operators with $1.5 million salaries. In retaliation to this investigation, the federal government gave New York State a deadline; recoup $1.5 billion dollars of Medicare fraud in 5 years or pay for the mistakes. A large task to take on, but one in which Gov. Eliot Spitzer assigned James G. Sheehan to accomplish. With this strict deadline, Sheehan took extra measures to gain back the stolen money. He exceeded these targets placed on by the federal government and reclaimed 1.2 percent of its total Medicaid spending - the highest in the nation.
This accomplishment came with some unhappy customers. Mr. Sheehan was accused to "gangster-like" tactics, and was supposedly "making up his own rules". The medical industry reached into their pockets, and Mr. Sheehan was fired last June. In his place, his successor, James C. Cox. Although many would agree that Mr. Cox would be a qualified replacement, he would be heavily restricted by the new governor's legislation. Sheehans successor must now answer to Cuomo legislation and try to come to a reasonable conclusion that both parties agree on when auditing. He will not be allowed the freedoms Mr Sheehan was given.
Although it is not expected that Mr. Cox will achieve the goals that Mr. Sheehan accomplished, it should be noted how quickly and effectively the medical industry shut down the government opposition. It shows that government agencies are not controlled by the people who fund them, but rather the ones who take it. As Mr. Sheehan stated: "Medicaid is to New York what corn is to Iowa."
Sources : http://www.nytimes.com/2012/03/19/nyregion/new-medicaid-inspector-general-supports-less-adversarial-audits.html
New York State has the nations largest Medicaid Program, which reaches $53 billion. However, according to a 2005 investigate, thousands of fraudulent cases were missed, that cost New York State billions of dollars. For example, Health Department regulators missed dentists who billed for 991 procedures daily, and nursing-home operators with $1.5 million salaries. In retaliation to this investigation, the federal government gave New York State a deadline; recoup $1.5 billion dollars of Medicare fraud in 5 years or pay for the mistakes. A large task to take on, but one in which Gov. Eliot Spitzer assigned James G. Sheehan to accomplish. With this strict deadline, Sheehan took extra measures to gain back the stolen money. He exceeded these targets placed on by the federal government and reclaimed 1.2 percent of its total Medicaid spending - the highest in the nation.
This accomplishment came with some unhappy customers. Mr. Sheehan was accused to "gangster-like" tactics, and was supposedly "making up his own rules". The medical industry reached into their pockets, and Mr. Sheehan was fired last June. In his place, his successor, James C. Cox. Although many would agree that Mr. Cox would be a qualified replacement, he would be heavily restricted by the new governor's legislation. Sheehans successor must now answer to Cuomo legislation and try to come to a reasonable conclusion that both parties agree on when auditing. He will not be allowed the freedoms Mr Sheehan was given.
Although it is not expected that Mr. Cox will achieve the goals that Mr. Sheehan accomplished, it should be noted how quickly and effectively the medical industry shut down the government opposition. It shows that government agencies are not controlled by the people who fund them, but rather the ones who take it. As Mr. Sheehan stated: "Medicaid is to New York what corn is to Iowa."
Sources : http://www.nytimes.com/2012/03/19/nyregion/new-medicaid-inspector-general-supports-less-adversarial-audits.html
Tuesday, February 28, 2012
PCAOB Creates New Audit Standard
Earlier today, the Public Company Accounting Oversight Board (better known as the PCAOB) released a statement stating that they plan to issue for a public comment on proposed auditing standards that are in relation to related-party transactions. The article continues to describe what would be included and what would be looked at if this standard comes to fruition.
One comment in the article really made me smerk:
“The board is considering these changes because related-party transactions and significant unusual transactions have played a recurring role in financial failures..."
This comment was stated by the PCAOB Chairman, James R. Doty. Now I wonder how he came to this conclusion? Enron and Arthur Anderson ring a bell?
I think this standard is extremely over due. About ten years over due. This standard should have come hand in hand with the Sarbanes Oxley Act in 2002. Both this new standard and SOX are a product of Enron, and the governments response to a glaring problem that they did not see until it imploded in their face.
This standard is going to " improv[e] the auditor’s identification and evaluation of significant unusual transactions [that] might assist the auditor in identifying related parties or relationships or transactions with related parties previously undisclosed to the auditor"
It gives the auditor more rights to become suspicious of any transaction they think needs more investigation. Of course companies are going to try and hide related-party transactions, but this gives the auditor more confidence to further investigate suspicious transactions.
Although many steps have been taken to find these transactions ever since the time of Enron, the PCAOB seems as if they were just catching up. It would even be satisfactory if this standard was in the step of being finalized, but it is only just at the stage of public comment. This means that it will give significant time for the public to comment on this standard, then they must take in and asses the comments, make further changes, then asses these changes again before finalizing. It will take time before this standard is put into effect but I believe that it will benefit the public in the long run.
One comment in the article really made me smerk:
“The board is considering these changes because related-party transactions and significant unusual transactions have played a recurring role in financial failures..."
This comment was stated by the PCAOB Chairman, James R. Doty. Now I wonder how he came to this conclusion? Enron and Arthur Anderson ring a bell?
I think this standard is extremely over due. About ten years over due. This standard should have come hand in hand with the Sarbanes Oxley Act in 2002. Both this new standard and SOX are a product of Enron, and the governments response to a glaring problem that they did not see until it imploded in their face.
This standard is going to " improv[e] the auditor’s identification and evaluation of significant unusual transactions [that] might assist the auditor in identifying related parties or relationships or transactions with related parties previously undisclosed to the auditor"
It gives the auditor more rights to become suspicious of any transaction they think needs more investigation. Of course companies are going to try and hide related-party transactions, but this gives the auditor more confidence to further investigate suspicious transactions.
Although many steps have been taken to find these transactions ever since the time of Enron, the PCAOB seems as if they were just catching up. It would even be satisfactory if this standard was in the step of being finalized, but it is only just at the stage of public comment. This means that it will give significant time for the public to comment on this standard, then they must take in and asses the comments, make further changes, then asses these changes again before finalizing. It will take time before this standard is put into effect but I believe that it will benefit the public in the long run.
Subscribe to:
Posts (Atom)