THE Guyana Chapter of the Institute of Internal Auditors (IIA), on Wednesday last, started a capacity building seminar for local practitioners, in Regency Suites on Hadfield Street, Georgetown.

With the theme ‘Tools and Techniques – How to manage your Chapter’, the primary focus is management of risks and its relation to internal controls and information technology (IT) fraud, with 100 persons from 30 public and private sector entities participating.

Local IIA President, Mr. John Seeram said, in light of the global situation, increasing attention needs to be paid to those responsible for corporate governance.

“Directors, executive management and auditors are viewed differently by the public, shareholders and the Courts in this rapidly technological age,” he observed.

He said, today, directors can be and are the first persons to be held accountable for the failures of their companies locally and overseas.

“The demise of Enron and Arthur Anderson, corporate bankruptcies, CLICO and other scandals have led to resounding response from regulatory bodies, governments and even the man in the street,” Seeram pointed out.

He noted that, in this 21st Century, significant growth is being seen and will continue.

“This (the growth) in itself is a call to ensure that all governance stakeholders, such as the Board of Management, the Audit Committee, auditors, senior management and all other staff members have a role and that they are doing everything they can in areas of fraud prevention and fraud detection,” Seeram stated.

According to him, some recent statistics have indicated that nearly one-third of business failures are attributed to internal fraud, while organisations are losing as much as seven per cent of their income as a result of that problem.

WORST FRAUDS

Seeram said another 85 per cent of the worst frauds are perpetuated by employees.
“Preventing, detecting, investigating and taking corrective action on fraud is essential to the health and integrity of organisations and the wider community,” he posited.

Seeram said capacity building sessions, facilitated by IIA, are important, considering the need for staff to:
** have a basic understanding of fraud and be well aware of red flags;
** participate in the process of creating a strong control environment;
** understand their roles within the internal control environment;
** know when non-compliance may create an opportunity for fraud to occur or go undetected, and
** participate in the control and design of fraud control activities and monitoring activities, among others.

He said the need to critically assess Information Technology (IT) environments in organisations must be recognised.

One of the main facilitators at the workshop, Mr. Jose Marin, from Puerto Rico, told the Guyana Chronicle that the exercise was seeking to map the concepts of risk management and internal control to that of IT fraud.

“We deal with risks everyday and, for businesses, it is imperative that they be addressed…risk management is not a fancy concept that only applies to large companies. This is a misconception that must be cleared,” he contended.

Marin said the different aspects of risks must be dealt with for a business to be operating the way it should.
“Internal audit is a support function. It is an oversight function,” he posited.

INCREASING EMPHASIS

Member of the Guyana IIA Board of Governors, Mr. Oswald Barnes agreed and added that IT fraud is a problem, particularly with the increasing emphasis on automation of systems.

He said training is a necessity to improve the understanding of risk management and fraud among stakeholders.

But he acknowledged that, in Guyana, risk management is comparatively new although it is receiving increasing attention after the strains of the global financial crisis.

The Wednesday seminar is the fifth such event, and is part of a two-year programme that started in April 2009.

At the conclusion today, regional stakeholders from IIA chapters across the Caribbean will gather for a two-day regional encounter, in an effort to enhance their development in promoting the internal auditing profession.

The Guyana Chapter is affiliated to the Institute of Internal Auditors, headquartered in Florida, United States (U.S.), which is seeking to enhance the internal auditing profession.

In this country, the IIA Chapter is tasked with conducting workshops/seminars on internal auditing; encouraging practising internal auditors to seek membership in the institute; updating auditors on current developments and getting practitioners to sit the  Institute’s examinations, in order to acquire, among other qualifications, the designation of Certified Internal Auditor and to conduct in-house training and capacity building in organisations.