Although the wide-reaching Sarbanes- Oxley act currently applies only to the public companies, there are internal controls components to it that- if proactively applied by a not-for-profit organizations and private companies – can help improve the value of your organization.

A thorough understanding of internal controls and how they create value is critical for any organization. It is the responsibility of the board of directors and management to effectively govern risks. An effective system of internal controls forms one of the foundations necessary to help your organization reach its full potential. For example, if an organization needs additional resources or capital, having a solid system of internal control helps provide stakeholders with degree of confidence. In addition, third parties that do business with an organization or private company may have policies that require internal controls or compliance with Sarbanes- Oxley.

Still, finding the time and skilled resources to implement a solid system of internal controls presents a challenge for many organizations and companies.

How we can assist The experienced professionals at JSA Consulting use a multi-phased approach to help you build a solid internal control system. Our multi-phased approach, outlined below, is designed to assess and document your company’s internal controls.

1. Planning
2. Assess design effectiveness
3. Assess operating effectiveness
4. Ongoing monitoring and testing

Our risk management methodology utilizes the Committee Of Sponsoring Organizations of the Treadway Commission Guidelines – the Standard for Internal Control. COSO is not only an integral component of our methodology, but the essence of the framework is built into our software tools.

But transforming the role of internal audit is easier said than done. It presents a human resource challenge for many businesses. Auditors are being asked to take on new responsibilities and leadership roles that not only require additional staff but different skill sets as well, both of which are in high demand. Rather than constantly struggle to hire, train and retain internal resources, many organizations have begun to outsource the entire function or co-source with an outside firm to supplement for their specialized needs.

Outsourcing the internal audit function enables management to hire dedicated internal audit professionals without the day-day managerial requirements. Outsourcing also allows the company to monitor key areas within the organization – giving high quality assurance to the board that risks is being monitored effectively and objectively. Other companies prefer to maintain ownership of the internal audit function and look to outside firms to supply professionals for critical projects as specialists on as needed basis. The specialists typically possess expertise related to; large projects management, logical security, fraud and specific software packages. In either case, choosing the right firm and model to address your internal audit needs is a complex decision.

How we can assist

JSA Consulting has qualified internal audit resources to assist your organization in whatever extent you desire. There are several benefits from working with our internal audit professionals:

• Enables you to leverage your in-house resources more effectively
• Allows management to focus on business operations
• Raises the awareness of management’s support for a sound internal control structure

Forensic accounting is an investigation to test for abnormalities within an accounting system. It is also commonly known as a fraud investigation; and involves misappropriation of assets or fraudulent reporting.

A typical forensic engagement with JSA Consulting includes the following processes:

1. Pre- engagement and planning procedure phases

• Fact finding and basic firm overview
• Conflict of interest
• Prepare preliminary fee estimate
• Determine scope of engagement and develop agreement with client

1. Investigation phase

• Ascertain financial records, legal procedures
• Identify and evaluate fraud exposure
• Obtain and inspect relevant documents
• Plan and conduct interviews
• Evaluate evidence

1. Reporting and wrap-up phase

• Prepare investigative findings
• Discuss w/ client and client’s attorney
• Prepare reports and or testify

Each forensic engagement stands on it own. The initial meeting with client in which the scope of work is determined, also defines the extent of the procedure to be utilized throughout investigation. The above is a general outline and should be used as a guide.

What can you do to prevent fraud?

Fraud prevention can be anchored around two areas – strong internal controls and a hotline. Internal controls are single most effective measure to assist in deterring fraud. Hotline is the most effective method to detect fraud. An internal control review can suggest cost effective ways to strengthen your internal controls.

Other employees expose most frauds as a result of tips and complaints. A 2012 report in the United States showed that fraud was much more likely to be detected by a tip than more traditional methods such as internal audits. An interesting note is that in frauds committed by owners and executive, which are generally the most costly frauds, over half the cases were identified by a tip. The report also found that having a hotline could reduce fraud losses.

How we can assist

Our highly trained team can provide ethics training. Monitoring services on a periodic basis throughout the year and assist you in setting up a free hotline. JSA Consulting utilizes a confidential reporting process, which provides information about a transaction. We will work with your company to research the alleged transgression and seek to improve the situation by identifying what has happened, why it happened and how to prevent it from happening in the future. We offer antifraud services in all three critical phases of fraud protection.

Fraud protection improvement – detailed analysis of anti-fraud practices, systems and policies resulting in recommendations for and/or development of improved policies. Training of Board members, management, department heads and supervisors. Assistance in implementing anti-fraud practices, systems and policies.

Monitoring – a specialized form of internal auditing devoted to periodic evaluation of organizational compliance with anti-fraud policies and analysis of indicators of fraudulent activity. The results of our work will be communicated to appropriate levels of management. JSA Consulting has assembled, trained and developed a team of professionals with variety of pertinent skills and backgrounds to provide antifraud services.

Investigation – If fraud or abuse is suspected or alleged, JSA Consulting can assist with performing all investigative services necessary to maximize your recovery of lost resources and testify against the perpetrators. In addition, JSA Consulting can setup a confidential tip-line that be used by your employees to report any potentials concerns within your company. A complaint form can be utilized to report allegations fraud, corruption or abuse. These complaints will remain confidential.

A catastrophe is never in anyone’s plans, but have you taken time to consider how your business would continue to operate in the event of a disaster? If not you could be risking all the work you have put into building a successful organization. Most business will experience threat to their critical systems – threats like power outage, fire, flood or a computer virus. Critical systems disruptions – no matter how long – are not only frustrating, but can cause severe financial losses and threaten and survival of your organization.

Businesses depend heavily on computer technology, communications and automated systems. Disruptions for even a few days can cause irreparable financial damage. While all disasters cannot be predicted or prevented, their effects can be mitigated. That is why a Business Continuity Plan is so important. It not only provides your organization with a comprehensive statement of actions to be taken before, during and after a disaster to minimize its impact, but also offers a certain level of comfort in knowing that if a catastrophe occurs, it will not result in complete financial disaster.

How we can assist

JSA Consulting provides organization-wide continuity planning. Developing a Business Continuity Plan is a difficult and complex process. Our advisors work with you to develop a plan that you can have confidence in; one that provide for seamless continuation of important business operations and recovery of facilities, technology and other critical resources. Our approach to business continuity planning often includes the following elements;

• Evaluation and prioritization of critical needs
• A comprehensive written plan addressing the key operations in each functional area
• Identification of high risk threats, their impact and prevention techniques
• Prioritization of processing and operations to determine the recovery timeframe required for each operation, function, system or service
• Analysis of existing disaster recovery insurance
• Review of potential recovery facilities and off-site procedures