Risk / Controls

About Risk / Controls Consulting

An ounce of cure is worth more than a pound (or more) of cure.

We start with an understanding of business processes and cycles, and knowing how they should function effectively and efficiently, through design and implementation.

When internal controls become sluggish, fraud can flourish. We assess controls, risks and best practices for these essential business processes and cycles:

  • Financial Reporting, Reconciliation, Analysis
  • Revenue, Receivables, Collections, Cash Inflows
  • Human Resources / Payroll
  • Capital Projects / Fixed Assets
  • Purchasing, Payables, Cash Outflows
  • Production, Inventory

A process-driven approach

To identify risks, the key processes and related controls must be understood. We ask the questions: Who has access to assets? Who makes approval and authorization? How accurately and completely is it all accounted for? What is the effectiveness level of the audit function?

What We Do

Identify weaknesses.
Provide solutions.

Findings and Impact

As risk consultants and internal auditors for multi-national corporations and governments / government agencies, we identify weaknesses in processes and internal controls, which may lead to corruption, fraud, waste, abuse or inefficiency.

Recommendations

Identifying areas of risk is just the first phase of the engagement. Not only do we identify and evaluate risk areas, but recommend management and control systems that prevent, deter, detect, minimize and mitigate the risk in the future.

Results

Stopping the losses, before they happen

Below are typical findings related to our past Risk / Controls Consulting Services.  For additional case experience, please refer to Forensic, Investigation, Intelligence and Expert Witness.

Revenue, Shipping,
Accounts Receivable

Accounts Receivable Aging

Accounts receivable older than 60 days, indicating ineffective collection procedures and exposure to skimming and/or inflated / fictitious revenue ($7.7 Million).

Cash Collection & Application

Inefficient cash application, resulting in unapplied cash receipts ($2.8 Million).

Uncollected Invoices

Uncollected sales invoices older than 60 days, indicating exposure to skimming or inflated / fictitious revenues.

Purchasing,
Receiving,
Accounts Payable

Segregation of Duties / Incompatible Functions

Lack of separation of duties for new vendor setup, invoice approval, processing and printing / distribution of vendor payments.

Shell Companies,
Conflicts of Interest

Identification of shell companies and fictitious vendors, as established by procurement official, for purposes of self-dealing.

Corporate Credit Cards and Procurement Cards

Lack of review of corporate procurement cards, with multiple employees possessing access to credit card numbers, PIN codes and billing ZIP codes.

Payroll,
Human Resources

Segregation of Duties / Incompatible Functions


Lack of separation of duties for new employee setup, time entry and processing / distribution of payroll checks.

Time Reporting, Commissions

Falsely reported hours and acceptance of unauthorized compensation.

Ghosts in the Payroll

False payments to terminated employees, non-employees or employees that are completely fictitious.

Production,
Inventory

Raw Materials Inventory


Inventory shipments from suppliers that were 50% less than their reported amounts.

Inventory Storage & Valuation


Income understatement, resulting from inventory valuation errors. Provided new formula for calculating mass storage inventory.

Reconciliation: Physical Counts with Perpetual Records

Failure to perform physical inventory counts and reconciliation with perpetual inventory system records.

Capital Projects,
Fixed Assets

Overspent Budgets and Contracts


Capital projects that overspent authorized limits, in connection with $65 million local option sales tax

Ineffective Reconciliation & Monitoring

Ineffective reconciliation and monitoring processes for $400 million construction program of a private university.

Capital projects not regularly monitored, denoting exposure to over-spent contracts, kickbacks, change order abuse, and/or bid rigging ($114 Million).

Contract Abuse &
Over-spending

  • Change order abuse
  • Work performed but not budgeted / contracted
  • Lack of performance
  • Lack of quality in contracted work
  • Preferential vendor treatment.

Financial Reporting,
Reconciliation,
Analysis

Lack of Oversight, Review and Reconciliation


Current assets for a single division overstated, and not reconciled with balance sheet, indicating exposure to overstated revenue or understatement of expenses.

Inefficient Financial Closing Process


Process inefficiencies in monthly financial closing, inventory management, and sales and production forecasting processes for a global manufacturer of tractors and farm machinery.

Completeness &
Existence

Assets listed on fixed asset ledger, which were no longer in existence.