During an audit, it is crucial that you spend your time efficiently. Without proper planning or thinking, you will be wasting the companies time and resource. In this article (Revenue Errors), the Indiana Department of Revenue was audited because of two errors that lead to $526 million misplaced. This error lead to three people losing their jobs.
In the article it quotes the Gov. "Any that are found now are likely to be far smaller in amounts, but, you know, it doesn't matter how small - we'd like to debug everyone one of them,". For the Gov. to have auditors find every last misplaced dollar is a huge waste of resources and time for the Govt and auditors. Some of these dollars are low impact areas which means you should only spend a little time working on these. After the auditors find the big mistakes, the govt should just have them work on something else.
I would also like to address the issue of having prevention controls vs. having detection controls. These errors were made because of miswritten software. To me, miswritten just means that they didn't proofread the code enough times. If they did a couple more proofreads, those three workers could have still had their job and the govt wouldn't have had to spend all this money trying to fix it. Usually it is easier and more cost efficient to spend money on detection, but I feel in this case, it would have been easier to just spend money on more proofreaders. Of course, even with all the proofreading in the world, an error could have occurred, but it would have been less likely to have happened.
Saturday, April 21, 2012
Monday, April 2, 2012
Changing to Please People
Throughout the world, many companies run businesses that go against the law. For many years, those companies seem to get away with bad business practices without a care in the world. It is only until those bad practices are pointed out to the general public do the companies change. Right now, Apple Inc. is in the process of changing the work ethics at their factories under Foxconn in China (Foxconn Audit).
After recent audits on Foxconn, due to reports of poor working conditions and a large amount of suicides, they started to change the way they treat their employees in China. Apple has lowered the amount of hours employees work while increasing their wages to compensate for the hours lost. Apple and Foxconn are working on improving the fairness to their employees in order to meet labor laws in China.
My question is, if the auditors never found anything wrong with Foxconn, would Apple and Foxconn have changed the way they treat their workers? I think they wouldn't have changed anything about the way they operate. As of now, the changes they will have to make to improve the labor treatment will have huge impacts on their net income! Apple will either have to suffer a lower profit margin or they will have to increase the cost of their products which will decrease the amount of products sold. Either way, their net income will go down.
I feel that the companies are only making changes because they feel like if they don't, they will come under huge criticism. If Apple really cared about the unfairness to their employees, they would have been looking into it long ago and fixing the problem. Instead they wait until someone shines light onto it to address the problem. If people didn't care about the situation even with it in the news, then I doubt Apple would make any changes at all.
After recent audits on Foxconn, due to reports of poor working conditions and a large amount of suicides, they started to change the way they treat their employees in China. Apple has lowered the amount of hours employees work while increasing their wages to compensate for the hours lost. Apple and Foxconn are working on improving the fairness to their employees in order to meet labor laws in China.
My question is, if the auditors never found anything wrong with Foxconn, would Apple and Foxconn have changed the way they treat their workers? I think they wouldn't have changed anything about the way they operate. As of now, the changes they will have to make to improve the labor treatment will have huge impacts on their net income! Apple will either have to suffer a lower profit margin or they will have to increase the cost of their products which will decrease the amount of products sold. Either way, their net income will go down.
I feel that the companies are only making changes because they feel like if they don't, they will come under huge criticism. If Apple really cared about the unfairness to their employees, they would have been looking into it long ago and fixing the problem. Instead they wait until someone shines light onto it to address the problem. If people didn't care about the situation even with it in the news, then I doubt Apple would make any changes at all.
Monday, March 26, 2012
Jumping the gun
During 2004 to 2009, coalfields were allocated throughout India to private companies. This was recently leaked through a leaked audit report. According to the report, these allocations lead to the loss of over hundreds of billions of dollars (India Audit).
There was an outrage by opposition parties due to the fact that these coalfields weren't competitively bidded off. Without the competitive bidding, there is speculation that the government sold off coalfields for a lot cheaper than they could have been sold for. This leads to a huge loss estimated to be around $210 billion.
According to the auditing company, those were just an early draft of the report and are very misleading. "It said the auditors have not concluded that the coalfield buyers' gains were equal to any losses in the government treasury." This could mean that the estimated losses could be very false.
My concern to these kinds of leaks is how do they get leaked in the first place and if there are any charges brought upon the auditors for these leaks. Leaks like these, even though the findings could be true, could also be false and lead to situations that could damage the reputation of a company. Should there be a fine or punishment for mistakes like these?
I feel like there should be a tighter control on the reports. With small teams working on reports like these, there shouldn't be any easy way to accidentally leak out a report. I think there should be a huge fine and punishment on a firm and or auditor who leaks a report earlier than should be.
There was an outrage by opposition parties due to the fact that these coalfields weren't competitively bidded off. Without the competitive bidding, there is speculation that the government sold off coalfields for a lot cheaper than they could have been sold for. This leads to a huge loss estimated to be around $210 billion.
According to the auditing company, those were just an early draft of the report and are very misleading. "It said the auditors have not concluded that the coalfield buyers' gains were equal to any losses in the government treasury." This could mean that the estimated losses could be very false.
My concern to these kinds of leaks is how do they get leaked in the first place and if there are any charges brought upon the auditors for these leaks. Leaks like these, even though the findings could be true, could also be false and lead to situations that could damage the reputation of a company. Should there be a fine or punishment for mistakes like these?
I feel like there should be a tighter control on the reports. With small teams working on reports like these, there shouldn't be any easy way to accidentally leak out a report. I think there should be a huge fine and punishment on a firm and or auditor who leaks a report earlier than should be.
Sunday, March 18, 2012
Don't blame the business
An audit of a boutique that provides business attire to low-income job-seekers has been found to be not spending a government grant on the intended purpose. During 2010, $11 million have been given to a Detroit boutique in order to dress 400 low-income people who have a job interview lined up. It was found that only two people received this service (Funds to help 400 job-seekers aided only 2).
I believe there is a bigger issue here that has been looked over. I'm not sure what kind of clothes this boutique runs or how much clothes a low-income person needs, but having $27,500 per person to spend on business attire is ridiculous. The government should be the ones to be audited since they are giving out these grants. If the government is not looked into during this situation, more situations like this could arise easily.
The problem of giving away such a large amount of money might be due to a lack of communication within that area of the government. If someone was told that they were going to be supplying 40,000 people, then that number would make more sense. Without double checking between grant workers, grave mistakes like this could occur leading to a huge loss of money in the system.
I believe there is a bigger issue here that has been looked over. I'm not sure what kind of clothes this boutique runs or how much clothes a low-income person needs, but having $27,500 per person to spend on business attire is ridiculous. The government should be the ones to be audited since they are giving out these grants. If the government is not looked into during this situation, more situations like this could arise easily.
The problem of giving away such a large amount of money might be due to a lack of communication within that area of the government. If someone was told that they were going to be supplying 40,000 people, then that number would make more sense. Without double checking between grant workers, grave mistakes like this could occur leading to a huge loss of money in the system.
Sunday, February 26, 2012
Improving Your Control
It is a know fact that having controls in a business is very important. But does having controls in place mean that you will be safe from everything? NO! You must have strong controls in place in order to prevent fraud from happening. Even if you think that you have good controls, you should constantly review them in order to make sure there are no leaks. This article about an audit on state Building and Grounds Section (Read Here) talks about how an legislative audit of the section found poor controls that could lead to serious issues.
Issues and ways to correct them!
1. They had people's social security numbers posted on a website in plain view for everyone to see.
Before a website goes live, you should look through every detail to make sure nothing is wrong and that everything is how it should look.
2. Purchase cards have very limited control. Each card has a limit of $250 - $3,000 a purchase. Also, more than half of the employees have cards, yet most of them don't even use it.
The purchase cards should have a max limit. This would prevent people from over spending money. They should also consider using cards for specific stores so people don't use it for their own good. Finally, they should have a control where you must sign the card out if you want to use it instead of just giving it to everyone.
3. There are errors in payments such as the rent for an office space.
Review your costs and expenses regularly! This will reduce the risk of you miss paying for something.
4. The computer recovery system for disasters is old which could make recovering data hard or even impossible.
Make sure to review your system recovery at least once a year. Data is the most important thing to protect. If you lose your data and you had on records that people owed you money, they will not owe up to what they owe you!
Issues and ways to correct them!
1. They had people's social security numbers posted on a website in plain view for everyone to see.
Before a website goes live, you should look through every detail to make sure nothing is wrong and that everything is how it should look.
2. Purchase cards have very limited control. Each card has a limit of $250 - $3,000 a purchase. Also, more than half of the employees have cards, yet most of them don't even use it.
The purchase cards should have a max limit. This would prevent people from over spending money. They should also consider using cards for specific stores so people don't use it for their own good. Finally, they should have a control where you must sign the card out if you want to use it instead of just giving it to everyone.
3. There are errors in payments such as the rent for an office space.
Review your costs and expenses regularly! This will reduce the risk of you miss paying for something.
4. The computer recovery system for disasters is old which could make recovering data hard or even impossible.
Make sure to review your system recovery at least once a year. Data is the most important thing to protect. If you lose your data and you had on records that people owed you money, they will not owe up to what they owe you!
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