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Colorado Government Finance Officers Association The Future of Internal Audit July 23 - 24, 2020 1

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Page 1: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Colorado Government Finance Officers AssociationThe Future of Internal Audit

July 23 - 24, 2020

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Page 2: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Agenda

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1) Introduction2) Key trends: Governance and Enterprise Risk Management3) Tools: Leveraging visualization, data analytics, and robotics4) Wrap-Up

Page 3: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Introduction

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Matt Bohdan, CPA, CIA, MBASr. [email protected]

Troy Snyder, [email protected]

Page 4: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Key trends: Governance and Enterprise Risk Management

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Page 5: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

The importance of internal control

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• Minimize opportunities for errors and omissions• Identify small issues before they aggregate into big problems• Reduce the risk of intentional fraud

Page 6: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

2013 COSO Internal Control Framework

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This Framework is summarized by the COSO CUBE

COSO’s Internal Controls framework is based on three objectives and five components across the organization

COSO’s Components

COSO’s Objectives

In 1992, the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") issued the original Internal Control—Integrated Framework ("1992 Framework").

Page 7: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Enterprise Risk Management

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The culture, capabilities, and practices integrated with strategy-setting and performance, that

organizations rely on to manage risk in creating, preserving, and realizing value.

Page 8: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

ERM framework foundation

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Governance and culture

Strategy and objective setting

Performance

Review and revision

Information, communication, and reporting

Page 9: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Four key pillars

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Process management around new and evolving risks

Preparedness for unexpected disasters

Staff roles and accountability

Holistic, enterprise-wide design

Page 10: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Tools: Leveraging visualization, data analytics, and robotics

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Page 11: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Analytics and visualization

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HEAT MAPDepicts all risks in the organization’s risk universe on a two-dimensional scale

Risks that represent the highest impact and likelihood,appear in the upper right area of the map.

Risks representing the lowestimpact and likelihood appear in the lower left area of the map.

Page 12: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Analytics and visualization

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BULLET CHART

Depicts all risks in the organization’s risk universe using a multi-dimensional scale

Compares inherent risk and residual risk to show progress, gaps

Includes clear elements for risk velocity and overall appetite.

Page 13: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Analytics and visualization

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General Ledger Risk Analysis

Control points analyze every transaction in the general ledger to identify transactions and/or trends that may be the result of erroneous, or potentially fraudulent, behavior.

Analysis of the risk associated with the transactions, accounts, and account groupings for a defined period.

Control points triggered and classified as high-risk by all sampled transactions.

Page 14: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Analytics and visualization

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Classified transactions as low, medium, and high risk

Validated the consistency of low and medium risk transactions

highest risk transactions occurred in May and December, while there were no transactions in either July or September which rose to a high-risk status.

Risk breakdown by time period

Page 15: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Leveraging Robotics

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Robotic process automation (RPA) is a business process automation technology software that utilizes specific commands in the form of robots to complete repetitive tasks

1. A software robot (bot) that automates repetitive rule-based actions performed electronically.

2. A digital worker that supplements or replicates work done by a real person.

3. A script that completes tasks quickly and with a low error rate.

Page 16: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Leveraging Robotics

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Page 17: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Example: Internal Audit

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Information System

ReportFilter report for unapproved

records

Export f iltered report to ResultsImports report

Auditor

Robot

Distribute email to unapproved supervisors

Review list and approve records

Import results from init ial distribution

Consolidate all unapproved records still

remaining after deadline

Send email with approved records

to robot

Client

Audit unapproved records, address

control performance improvement

Init iates audit / activates robot

Robot

Page 18: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

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RPA strengths and weaknesses

Significant ROI

Consistency

Increased Satisfaction

Does not Evolve with Processes

Requires Structured

Data

Major Change

Page 19: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

Questions?

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Page 20: Colorado Government Finance Officers Association The ...Introduction 3 Matt Bohdan, CPA, CIA, MBA Sr. Manager 248-223-3619 Matthew.Bohdan@plantemoran.com Troy Snyder, CICA Partner

THANK YOU!

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