Which Audit Report to Rely On

Post by Larry Beebe

A U.S. District Court of Appeals for the 7th circuit had to decide which audit of an employer’s payroll reports to rely on. An audit report by the funds showed the defendant owed 1.8 million to the funds. An audit conducted internally by the defendant showed the funds had been overpayed by 1.2 million. The auditor of the funds calculated underpayments but ignored overpayments. The court decided this was proper defense it was the burden of the […]

Service Organization Controls and User Controls

Post By Sarah Phillips

Outsourcing services has become a popular way for Organizations to cut costs and to focus on their core strengths. However, a lack of control and knowledge over the behind-the-scenes processes are seen as major cons of outsourcing. How can an Organization be sure the service provider has good practices in place? Just because services are being outsourced doesn’t mean information can’t be obtained about how the service organization operates and how they keep an Organization’s assets […]

Internal Controls – Reporting

Post By Tony Cafferelli

Internal controls over financial reporting is vital to preventing and detecting material misstatements. In order to achieve reasonable assurance that your Plan’s financial reporting objectives are being met, you must first ensure that your internal controls are working effectively. To ensure effective internal controls over financial reporting, a few things must first be considered: The audit committee, trustees, and management must set the appropriate environment or tone at the top with respect to oversight and ethical […]

Next in Our Internal Control Series – Authorization

Post By Kaitlin Cardozo

‘Internal controls in the authorization of reporting and processing transactions’ can at first glance seem like an exceedingly dry topic. What exactly does this mean? Why is it important to my company or organization?

That phrase and understanding its implications is actually incredibly important in any organization – whether it’s a multimillion, multinational enterprise, or a small not-for-profit with a handful of employees. In layman’s terms, the phrase means that: 1) all transactions that occur, and the […]

Entity-Level Controls; Information Systems

Post By Doug Falatko

In any internal control environment at any entity, there is one common factor that affects all members of the organization- information technology (IT). Information technology is the element that has the broadest impact on its users and is one of the least understood and least likely to be discussed. While this element of the internal control environment may seem like something to defer to the IT experts of the world, information technology is something that should be […]

Combating Fraud With Internal Controls – Where Do I Start?

Post By Khal Taib
“It can never happen to us!” is a too common thought that passes through the minds of managers across the globe spanning countless industries. The concept of fraud is not a sexy subject for those in management. No one ever believes that what happened in the well-publicized fraud schemes, could happen to them or their respective organization. And yet, an entity with weak control activities can find itself swirling in fraud and finding themselves in the […]

Administrative Expenses: Whose Alligator Boots are You Buying?

 Post By Emily Hewitt 

In federal court the former vice chairman of ABC-Mart pled guilty to committing fraud for a period that lasted longer than six years. John Smith was convicted of fraud for embezzlement, theft of gift cards and merchandise and unauthorized use of the company’s credit card for personal purchases. How can we and ABC-Mart learn from this nightmare?

Mr. Smith was allegedly involved in creating dummy vendors and invoices and coercing subordinates to approve expenses without support. He would […]

SOC 1 Reports – Why You Need Them

Post by: Ashleigh Hall
What are SOC 1 Reports?
A Service Organization Controls (SOC) Report describes the design of the internal controls at a service provider (SP).  There are multiple kinds (SOC 1, SOC 2, SOC 3), however, the SOC 1 report is the most likely one to apply to your organization.  There are also 2 types of SOC 1 reports; a Type 1 report describes the SP’s internal control structure.  A Type 2 report goes another step.  The firm engaged to […]

Lapping of Cash Receipts: A Bond Beebe Case Study

A few years ago, one of our audit clients was the victim of fraud when an employee embezzled cash receipts.  The fraud was made possible by a combination of unusual circumstances and errors in management judgment.

As we started the annual audit of our client’s financial statements, we learned that the long-time controller had decided to retire.  He did not want to leave the company in a bind, so he offered to stay on until the audit was completed.  By […]

Missing Pensioners

Larry Beebe, CPA

One of the Department of Labor’s “hot buttons” lately has been making certain that defined benefit pension plans do everything they can to reach retired participants who are required to start taking distributions.

Lois Gleason, at the International Foundation of Employee Benefit Plans, has written an excellent blog on how to send the proposal notices to that retired participant.