In 2002, Cecile Campbell, an accountant at automobile manufacturer Kia Motors America, embezzled company funds in a nearly $1 million billing scheme to get out of a personal financial crisis. With help from her brother and husband, she exploited the company’s weakness—ineffective internal controls—with the expectation that the fraud would likely go unnoticed. Though the company successfully prosecuted all three participants, Kia Motors no doubt performed an extensive assessment of how it handles risks and internal audit planning.
Assessing risk can be difficult due to very complex business operations. To ensure that internal controls work properly, internal auditors must know how to assess risks and manage them. Today more than ever, risk assessment is a key activity for the internal auditor, as it has transformed into an overall process of internal auditing, especially in internal audit planning. Consequently, risk-based internal auditing prevails in today’s practice.
Quality internal audit planning is essential to locate flaws inside the company by conducting internal audit work. Properly conducted short-term, long-term, and functional plans enable the internal audit department to fulfill its fundamental goal and help management and the organization achieve its objectives. Internal audit planning also helps maximize the organization’s strengths and opportunities while minimizing the organization’s weaknesses and threats.
Is your internal audit department equipped with the required knowledge to forecast and assess the risk of fraud? Are your internal auditors aware of the different types of risks facing your organization? Do you know how to assess and manage risks using your internal audit department? Are you aware of the importance of internal audit planning?
The Accenture Academy course Introduction to Risk Assessment and Internal Audit Planning
details different types of risks, their assessment, and planning for internal audits. This information will help you to forecast risk and to implement risk-based internal auditing.
Hardesty, Greg. “Lawyer Gets 4 ears for Kia Embezzlement.” Orange County Register
(May 27, 2010). www.ocregister.com
Tie, Robert. “'Customized' Embezzlement: A Near-$1 Million Billing Scheme.” Fraud Magazine
(February 2013). www.fraud-magazine.com