【#Audit /#Risk】How much impact would these audit findings/risk cause ?(2) 20221214001
This article is categorized under: Something about Business Management
Hi. This is Emily, the author of this blog.
Preface
-
If you are
interested in this topic, please be advised to click to view the first article in this series.
-
Sharing idea: In auditing work, it is not the
auditors are allowed to view everything per their own work interest:
(1)
The auditee
entities may concern about business information confidentiality issues while
auditors request for data viewing. What to do?! Such as : R&D plan, salary
detail and the list, employees profiles and business confidential information
access…etc.
(2)
No one like
auditors know what the annual audit plan look like, and all are unsure about
how auditing be authorized, if they did, they may not understand what it said,
and actually, on one knows whether it is revised after approved by B.O.D or
not?! Auditors are also human beings, no
one knows whether there is intention for their own personal benefit in
information request or not…。(Yes.
This is blunt, and this was those I shared in a meeting in public while I worked
as an internal auditor. 😆. If we don’t reflect the truth, we are not persuasive,
not independent, either.)
What to do for those concerns?!
Below are those options listed in meetings before; please
choose one or utilize one of them after considering the environment you work
for😆😆😆 ：
Option1：Department
representative doing arm wrestling fight to decide!
Option2：Rock-Scissor-Paper
game to decide!
Option3：Those solutions
were already written and announced in our management policy ->”The Procedure of business information request”:…「While being
requested or asked to reply specific information, and the reviewed department
has concern about the request, they are allowed to ask the “ requestor
department ” to use “ Information
Request Form ” according to this
Procedure and follow the “Level Of
Authorization” to get approval for
their information request from the reviewed department.
Option4: Ask the
reviewed department: What I need to give you to get the information I need from
you?!
Purose of this post
-
Using number to
describe the significance of risk or internal control weakness.
-
This is one of
all the ways to achieve the value of auditing works, its purpose is to
acknowledge the significance and aspects of all impacts, it is also to avoid we
view thing only focusing on one angle：
Auditor：Sir!
In auditing, we’ve found the R&D work progress has delayed for 6 months.
B.O.D：Oh!
So, what is the impact?!
Auditor：……..I don’t know…….
In the auditing work on [R&D work progress management],
[Approval work for recruitment and salary procedures], in this post, I explain
the way to use number in describing the significance of audit findings for your
reference. Please comment/email/Skype for [things you want to discuss] or
request for files in this post: please click here.
Please be cautious
of your description to avoid viewers copying and repeating the fraud story.
Thank you！
ü R&D work progress management: All R&D
works objectives are for new products or service development of the company in
order to maintain or enhance operating revenue inflow unceasingly; work
progress of R&D works influence the achievement of this company’s work
goal, and if there is work delays, it will surely affect the progress of new
products development and its operating income.
There are
companies doing 10 years or longer period of business planning and revising it
periodically, one of the purpose is to modify their plan by market demand and
professional work skill development to update their R&D work, adjust the
items of planned products; the way to
use number to describe the influence of R&D work progress delay, it is
surely to use estimated new product sales price ( or service charge)X estimated
products demand in the market (or number of people in need) and to get the
outcome to describe the number and the significance of the impact on business
revenue.
This is the first
one.
The second is the
on –going R&D investment related to those purchased or those equipment in
plan or personnel cost in budget and its
summarized R&D profit and loss statement composed of all the considered
items for decision making for stop-or-continue
the plan accordingly.
Explanation in
brief:
To predict OOO new
product Profit and Loss starting from the date it launches and the year end
A.P/L impact
2023/5 -12 [Estimated Sales]-[Estimated
Cost of Goods Sold]-([Budget Operating Expense in this period-by products]+[Budget
Recruitment and Personnel Cost saving due to R&D work delayed]+[Budget Equipments’
Cost and Depreciation saving due to R&D work delay in the budget ])=Profit or
Loss caused from OOO R&D work delayed
B.Net
Cash Flow impact caused from R&D work delayed
2023/5-12
-Net cash inflow delayed + Net cash outflow delayed
= OOO.
Work objectives of a company operation is to making money, thus, cash
flow review is more important than profit and loss, please be advised to not
ignoring this. For your reference.
Please be advised, in some work environment, R&D
work delay may cause a lot of monetary loss, it is not only an “oh!” could
describe the impact and importance of understanding.
ü
Approval work for
recruitment and salary procedures
Unauthorized salary
payment or amount revision, or, people using internal control weakness to
modify or creating fake account to “steal money from the companies” is
possible, it happened on mini size companies and the giants in the industry,
please pay attention to this situation.
Besides relying on
internal auditors to do computer aided auditing and document review
irregularly, it is very important to reinforce checks and balances work roles and steps to reduce the possibility
of fraud and ignorance.
To present the
risk of salary payment to unapproved
employment is to calculate the possibility of fake employments X amount X
related headcounts = the amounts of its significance
This amount
includes salary, insurance related to employments, disbursement on employees’
related equipment and the cost of information revelation and access.
Above describe the
situation in brief, share with you. Thank you.
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Wishing your
company：
Perfect
internal control triggers its endless business growth positively!
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#Audit #Risk #Procurement #InternalControl
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