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Ethical Environment
·
Do board
members and senior executives set a day-in, day-out example of high
integrity and ethical behavior?
·
Is there
a written code of conduct for employees? Is it reinforced by training,
top-down communications, and periodic written statements of compliance
from key employees?
·
Are
performance and incentive compensation targets reasonable and realistic,
or do they create undue pressure for short-term results?
·
Is it
clear that fraudulent financial reporting at any level and in any form
will not be tolerated?
·
Are
ethics woven into criteria used to evaluate individual and business unit
performance?
·
Does
management react appropriately when receiving bad news from subordinates
and business units?
·
Does a
process exist to resolve close ethical calls?
·
Are
business risks identified and candidly discussed with the board of
directors?
Risk Assessment and Control Activities
·
Is
relevant, reliable internal and external information timely identified,
compiled and communicated to those positioned to act?
·
Are risks
identified and analyzed and actions taken to mitigate them?
·
Are
controls in place to ensure management decisions are properly carried
out?
·
Does
management routinely monitor controls in the process of running the
organization’s operations?
·
Are
periodic, systematic evaluations of control systems conducted and
documented?
Audit Committee Effectiveness
·
Has the
board recently reviewed the audit committee’s written charter?
·
Are audit
committee members functioning independently of management?
·
Do
committee members possess an appropriate mix of operating and financial
control expertise?
·
Does the
committee understand and monitor the broad organizational control
environment?
·
Does the
committee oversee appropriateness, relevance and reliability of
operational and financial reporting to the board, as well as to
investors and other external users?
·
Does the
committee oversee existence of and compliance with ethical standards?
·
Does the
committee or full board have a meaningful but challenging relationship
with independent and internal auditors, senior financial control
executives and key corporate and business unit operating executives?
Internal Auditing Function Effectiveness
·
Does
internal auditing have the support of top management, the audit
committee and the board of directors?
·
Is the
organizational relationship between internal auditing and senior
executives appropriate?
·
Does
internal auditing have and use open lines of communication and private
access to all senior officers and the audit committee?
·
Is
there an internal audit plan (reviewed by the audit committee)
describing internal audit responsibility?
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