Impact of Shared Services on Internal Audit

Deryck Fuller, Mike Cappetta, Melissa Paulson

October 24, 2013

Agenda

• Our Audit Universe• Risk Assessment Process• Case Studies• Benefits of Shared Services• Keys to success

3

MGM Resorts International – A Brief History1993 MGM Grand:

The City of Entertainment

1998

ACQUISITION 1:

New York New York

Primm Valley Buffalo Bill’s

Whiskey Pete’s

2000

ACQUISITION 2:

Bellagio The Mirage

Treasure Island

Boardwalk

Golden Nugget

Beau Rivage

Golden Nugget – Laughlin

MGM Grand- Darwin, Australia

MGM Grand- Detroit

2005

ACQUISITION 3:

Mandalay Bay Excalibur

Luxor Gold Strike Colorado Belle

Edgewater Circus Circus Circus Circus Reno

Gold Strike Tunica

Slots-A-Fun Rail Road Pass

Monte Carlo

Nevada Landing

1999

1995

City Center 2009

- Divested

Risk Assessment Process

• Company Wide Risk Assessment • Business Process Risk Assessment

Risk Assessment Process

• How often do you perform risk assessments?• How do you gain comfort with controls over

financial reporting by testing a single process?• How do you determine business units to test

in a shared services environment?• How do you determine sample selections in a

shared services environment?

Key Questions for Shared Service Audits

• Does my audit universe need to be redefined? How can I better define my audits in the new environment?

• How should I reassess my audit strategy on an ongoing basis? • Do the controls now reside at the SSC or are they still in the business

units?• How much coverage can I get as a result of auditing at the center?• Do I need to audit only at the SSC?• How does an SSC affect sample size and sample selection when one

moves from a decentralized environment to a shared environment?• Are the processes and templates used across the SSC consistent? Do

work-arounds proliferate?• Can I use automation in the audit process more effectively now that I

am auditing in an SSC environment?

Source : PWC

Business Process Audits (Case Studies)

• Accounts Payable• Revenue Accounting • General Accounting

Accounts Payable

• Do the controls now reside at the SSC or are they still in the business units? Do I need to audit only at the SSC?

• How much coverage can I get as a result of auditing at the center?

• Are the processes and templates used across the SSC consistent? Does this impact sample size?

Revenue Accounting

• Do the controls now reside at the SSC or are they still in the business units?

• How much coverage can I get as a result of auditing at the center?

General Accounting

• How much coverage can I get as a result of auditing at the center?

• Are the processes and templates used across the SSC consistent?

2008 2009 2010 2011 2012 -

200

400

600

800

1,000

1,200

1,400

1,600

1,347

1,064

647

449

327

General Accounting

Year

Hour

s

Benefit of Shared Services

Keys to success

• Understand new technologies implemented• Add value by identifying process

improvements• Early involvement

– Steering committee – Milestone reviews

• Reassess audit strategy on an ongoing basis • Don’t fall into the SALY trap

Thank you!