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UMBC Management Advisory Services umbc/mas/

UMBC Management Advisory Services www.umbc.edu/mas/. INTERNAL CONTROL EDUCATION SESSION Presented by: Frances Toth ftoth@umbc.edu Ext. 56257 Sharon Doherty-Ritter doherty@umbc.edu Ext. 51620 Shared Fax 55676. Opportunity. Occupational Fraud. Pressure. Rationalization.

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UMBC Management Advisory Services umbc/mas/

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  1. UMBCManagement Advisory Serviceswww.umbc.edu/mas/ INTERNAL CONTROL EDUCATION SESSION Presented by: Frances Toth ftoth@umbc.edu Ext. 56257 Sharon Doherty-Ritter doherty@umbc.edu Ext. 51620 Shared Fax 55676

  2. Opportunity Occupational Fraud Pressure Rationalization

  3. Importance of Internal Controls • Prevent Occupational Fraud • Good business practices • Good audit reports • Legislative, Internal and External Audits

  4. What can happen without adequate internal controls? • Fraud Report Findings

  5. What Is Internal Control? • A process, effected by an entity’s management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: • Effectiveness and efficiency of operations; • Reliability of financial reporting; and • Compliance with applicable laws and regulations. Source: OMB Circular A-133

  6. Who’s Responsible?Ethical climate – institutional values • The establishment, implementation and monitoring of internal controls is the responsibility of the: • President for the Institution. • Vice Presidents for their Divisions. • Deans for the Colleges. • Department Chairs and Directors. • The tone is set at the top!

  7. Components of Internal Control • Control Environment • Risk Assessment • Information and Communication OIT training web site: www.umbc.edu/training • Monitoring • Control activities

  8. Control Activities • The policies and procedures that help ensure directives are carried out and objectives are achieved. • Includes activities such as: • approvals • authorizations • verifications • reconciliation • separation of duties: custody, approval, recordkeeping

  9. Limitations of Internal Control • Achievement of objectives is affected by limitations inherent to internal control systems. • Limitations include: • Judgment • Breakdowns • Management override • Collusion • Cost/Benefit

  10. Critical Control Points • Payroll • Cash Receipts • Departmental Deposits into PS • Procurement • P-cards • Equipment

  11. Opportunity Occupational Fraud Pressure Rationalization

  12. “Red Flags” of Occupational Fraud • Marked personality changes in employees • Financial pressures on employees • Employee living beyond his/her means • Employee having outside business interests • Poor internal controls

  13. “Red Flags” of OccupationalFraud (Continued) • Rising department expenses • Too much control in key employees • Lax management • Failure to pre-Screen employees

  14. What can you do? • Identify your needs by using the checklists we have provided. • Take the time and make the effort to implement changes. • Request appropriate resources and request assistance from your Business Services Manager or MAS.

  15. Reporting Fraud • Report suspected fraud or any “red flags” to your department head, Management Advisory Services, or Human Relations (Adrienne L. Mercer ext. 51606 almercer@umbc.edu) • Report fraud – Contact Office of Legislative Audits www.ola.state.md.us 1-877-372-8311

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