August 2014 Audi-Wire 1

2014 AUGUST MEET YOUR EXECUTIVE TEAM ............................ 2 EVENTS ..................... 3 TRAINING—ANNIVERSARY WEEK 2014 ................... 4 CAE CORNER ............ 5 FATCA LOOMS .......... 6 Audi Wire T H E I N S T I T U T E O F I N T E R N A L A U D I T O R S

T R I N I D A D & T O B A G O C H A P T E R N E W S L E T T E R

Welcome to the 2014-2016

Governors and Executive!

The IIATT chapter held its 26th Annual General Meeting on May 27th 2014 at Jaffa at the Oval, Port of Spain where the new Board of Governors and Executive Team were elected. This new team, most of whom are practicing internal auditors in their respective organisations, comes with a dynamic mixed professional background in field of accountancy, information systems and law. The Chapter took the opportunity to thank

Governor Claire Gomez-Miller for the yeoman service given to Trinidad & Tobago chapter. Mrs. Gomez-Miller is a past President and Caribbean District Representative of the IIA and who this year was selected to serve as a member of the Institute of Internal Auditors’ (IIA) International Public Sector Committee. This appointment demonstrates Claire’s commitment, passion and aspiration of an Internal Auditor who has Trinidad & Tobago Public Sector Internal Auditors interest at heart.

Board of Governors 2014-2016 The AGM saw the election of the Board of Governors for the term 2014 to 2016. The follow-ing members are returning Governors in the new term: Larry Kowlessar (Chairman), Natasha Elias-Wilson (Vice Chairperson), Wilbert Harris (Secretary), Kenny Jalsa, Penelope Williams, Marilyn Lewis-Stewart, Don Gonzales and Miriam Wilson-Edwards. In addition, two newly elected Governors for the term are Roger Ramdwar (Outgoing President), and Fernella Mc Carthy. Congratulations!

August 2014 Audi-Wire 2

Time for Internal Audit to Graduate

The audit committee is charged with oversight of financial reporting, the external auditor, other financial risks, and sometimes but not always enterprise risk management.

But the internal audit function should not limit itself to the remit of the audit committee.

It should be concerned with risks that are overseen by other committees or the full board - including governance failures, inadequate risk management, compliance risks, operational effectiveness as well as efficiency, and so on.

I think it's time for internal audit to graduate.

It was in kindergarten when it reported to the finance controller.

It moved to junior high when it moved to the CFO.

A college degree was earned when direct reporting went to the audit committee.

Now it is time to graduate and report to the lead independent director and participate in most if not all board committees, including governance, compliance, and risk.

Do you agree?

ABOUT THE AUTHOR:

Norman Marks

Norman Marks, CRMA, CPA, was a chief audit executive and chief risk officer at major global corporations for more than 20 years. The views expressed in his blog are his personal views and may not represent those of The IIA.

The New 2014The New 2014The New 2014---2016 Executive Team2016 Executive Team2016 Executive Team

From Left to Right: Noel Inniss (Senior Vice President); Lesliean Charles (VP-Government Relations); Florence Lee-Bhagwandass (VP-Professional Development); Rajin Ramjit (VP-Professional Services); Camille Cumberbatch-Dhoray (President); Brian Nelson (Internal Auditor); Precious Bissessar (Secretary); June Lezama (Treasurer)

August 2014 Audi-Wire 3

INTERNAL AUDIT AWARENESS MONTH

Congratulations to the winner of the Water and Sewerage Authority’s (WASA) Poem Contest:

Allison Elcock

THE TRUTH ABOUT AUDIT AND COMPLIANCE 

All yuh auditors comin’  Look how people start runnin’  

Dey all about like headless chicken  Is de same wherever yuh go  

Auditors does cause panic fuh so   

Some people say Audit is snitch  Befriend you fuh info an’ den dey switch  Dey modus operandi is to take you under  

Wai n’ an’ watchin’ for de slightest blunder   

Buh wha’ dis audit  ng really about  Ah did some research an’ ah found out  Is ah check an’ balance in de workplace  

Ensurin’  me an’ money people doh waste   

Audit mean ethics an’ reliability  Audit mean effec veness an’ transparency  

Dey maco what you do buh wit good purpose  Dey monitor an’ assess to be er advise us  

 Dey advise concernin’ compliance  

Wit regulatory rules we mus’ be in accordance  Legisla ve, contractual an’ ethical too  

Adherence to dese, be er for me an’ you   

Compliance boosts integrity, commitment an’ trust  For high performance business, dis is ah must  Risk management, control an’ governance  

Without Audit, in creeps decadence   

Opera ons is we backbone but Audit is we conscience  Dey inves gate an’ advise to keep we ou a nonsense  

Dey are concerned wit every aspect of business  Audit leads to longevity an’ corporate success  

September 2014 — Anniversary Week

October 2014 — Chapter Meeting (TBA)

November 2014 — Technical Training

December 2014 — Christmas Cocktail

Leadership Styles and the Moral Choice of Internal Auditors Internal auditors’ performance largely depends on their moral decisions when faced with ethical dilemmas. This study explores the impacts of different leadership styles on internal auditors’ moral choice using ERG theory and Path-goal theory. The findings of the survey demonstrated support for both theories. Regression analysis revealed that a sample of West Australian internal auditors were motivated by growth needs and the motivation was enhanced if the leader took a Standard-achievement-oriented approach. Gender appeared as an important predictor and female respondents in the survey were younger and less experienced than their male counterparts and appeared less motivated towards moral choice.

— Extract from the Electronic Journal of Business Ethics and Organization Studies, Authors: Gordon F. Woodbine and Joanne Liu

Thanks to all who attended the chapter meeting on July 16th where the presenter Mr. David West - Attorney-at-Law spoke on the topic Anti-Money Laundering and the Internal Auditor. It was a rich time of learning and a wonderful networking opportunity.

August 2014 Audi-Wire 4

Enhancing and Strengthening Your Professional Capabilities

September 8th — 12th

Venue: Arthur Lok Jack Graduate School of Business Max Richards Drive, Uriah Butler Highway, NW Mount Hope

Time: 8:30 a.m. – 4:00 p.m. daily (Breakfast served from 7:00 a.m.)

Contract Management and Administration – A Practical Experience

The Three Lines of Defence for Effective Governance, Risk Management, Controls & Compliance

MS Excel Data Mining & Data Analytics – BI Tools and Techniques for Auditors

Inventory and Materials Management

September 8th—9th (2 days, 14 CPD hours) Facilitator: Ronnie Bissessar Course Outline: FROM A LEGAL PERSPECTIVE Facilitator: Margaret Ann Depeza Course Outline: FROM AN OPERATIONAL RISK-BASED PERSPECTIVE

September 9th – 10th (2 days, 14 CPD hours) Facilitator: Claire Gomez-Miller

September 10th – 11th 2 days (14 CPD hours) Facilitator: Areef Ali

September 12th (1 day, 7 CPD hours) Facilitator: Stephen McClashie

Pricing Schedule 

Session Length 

Standard Member Price (15% VAT 

included) 

Standard Non‐Member Price 

(15% VAT Included) 

Two Day TTD $4,500.00  TTD $4,875.00 

USD $750.00  USD $815.00 

One Day TTD $2,000.00  TTD $2,200.00 

USD $335.00  USD $370.00 

Discounts extended to members of ICATT and ISACA, and Companies with more than 5 persons registering. Cancellation Policy: After Monday, September 1st, 2014, any cancellations will have to be paid for in full. For further information, please contact Ms. Juliana Julien at: Cell: 769-1671 Phone: 625-5558 Fax 623-4560 Email: iiatt@flowtrinidad.net

August 2014 Audi-Wire 5

   

The First 100 Days of the Chief Audit Executive are Make or Break

We continue to see regular turnover of the chief audit executive (CAE) at organisations around the world. There are many reasons for a change of CAE which from personal experience can occur with a change of Audit Committee Chair or CFO or in immature organisations as a result of robust auditing. Every new CAE needs to quickly understand their responsibilities, develop a vision for the function and make an impact early in their new role. New to role CAE’s will be compelled to define themselves as the leader of the internal audit function and an effective executive within the organisation. Why the CAE Transition is Important The internal audit function again finds itself in the midst of a corporate and regulatory response to another period of public outrage over corporate scandals, malfeasance, financial losses and failure. Internal Audit (IA) has been frequently challenged after each and every corporate failure—and rightly so. Audit is being increasingly – and often explicitly – held to account by investors, regulators, politicians and employees. Witness the new guidance published in the UK on the role of IA within Financial Services firms. While some of this activity may be a short-term response to the latest crisis, the long-term trend for IA remains undeniable. IA has steadily evolved it’s function and raised it’s status within most organisations to move from the traditional “financial auditor” through “business advisor” to the more coveted “governance partner and challenger” to the board, audit committee, CEO, management, and external constituencies. These positive trends increase the visibility and impact of every CAE. They also reinforce the need of a new to role CAE for a fast on-boarding that ensures:

they have consistently effective audit processes- from planning through execution, to reporting and driving the resultant required change,

the team consistently executes high quality engagement and audit resources are focused on the company’s most critical risks.

Understand the Reason Why the Predecessor Left the CAE Role CEB research on leadership transitions shows that leading companies – and transitioning executives (including new CAEs) – should understand the context of the transition. Understanding the context into which you are moving obviously impacts the relative priorities for the new to role CAE. When viewed this way, five transition situations emerge, accounting for more than 97% of all leadership transitions:

Smooth Sailing – the previous leader has moved according to a previously arranged transition plan under normal business conditions (3% of leadership transitions),

Replacing an Icon – the leader’s predecessor was very successful in the job (18%),

Following a Train Wreck – the leader’s predecessor was not successful in the job (27%),

...continued on page 6

Unlock Your Door to Opportunity with IIA Global Certifications

The IIA offers a comprehensive certification portfolio

for internal auditors that can serve as the key to

unlocking your next opportunity within the profession;

enhancing your credibility and adding clout to your

resume. By earning your Certified Internal Auditor®

(CIA®), Certified Government Auditing Professional®

(CGAP®), Certified Financial Services Auditor®

(CFSA®), Certification in Control Self-Assessment®

(CCSA®), and Certification in Risk Management

Assurance™ (CRMA®) certification, your clients and

employer know that you are a valuable team asset who

is highly motivated, knowledgeable, and committed to

ensuring quality is part of everything you do. IIA

certifications set you apart from other professionals,

unlocking your full potential and opening up countless

doors of opportunity for career growth and success. See

what awaits you on the other side of the door.

Visit: http://www.theiia.org

Contact us for more information if you are interested in pursuing any certification.

August 2014 Audi-Wire 6

...CAE Corner continued from page 5 Jump Start – a static environment where predecessor’s performance

wasn’t particularly strong or weak, but the organisation needs to quickly move in a different direction (19%),

Breaking Ground – the leader assumes a newly created position (31%).

What are the key challenges facing the new to role CAE during their transition? Unfortunately for new to role CAE’s, there is no panacea for the difficulties posed by their transition. They must identify an initial understanding of the expectations of management, through their own professional expertise and personal network together with building that knowledge during the recruitment process. Next, new CAE’s must leverage their prior experience to identify and aggressively address their own knowledge gaps inherent to their new position, role, department and organisation. Although the challenges posing the greatest difficulty varies for each new CAE transition, each challenge represents a hurdle the new CAE must demonstrably pass to successfully on-board. The background of the CAE (internal or external recruit, with or without audit experience) helps identify those activities that will pose the greatest challenge, requiring the most time and urgent attention during the transition period. Our research shows that all new to role CAE’s must address these 3 key challenges:

1. Defining the role of the audit function: CAE’s often share many common core responsibilities across large firms, but there are still significant differences both of audit scope and role among large companies, especially in different sectors. This can be significantly affected by regulatory requirements and the competence of other assurance providers in the organisation.

2. Mastering the business: CAE’s are increasingly asked to provide more risk management decision support and analysis to the business – sometimes planned and sometimes ad-hoc – and to lead or support company-wide initiatives. Therefore CAE’s must gain a comprehensive understanding of the business dynamics and the needs of their internal customers. Internally promoted CAE’s need to quickly establish their executive credibility among their new internal executive peer group. Externally recruited CAE’s must work hard to gain a complete picture of the new business and industry and also the associated risks.

3. Leading the audit function: New CAE’s often face an explicit mandate to improve the internal audit function but many have little sense of where to begin. In seeking to (re) build a best-in-class internal audit function, new CAE’s must start by clearly understanding their stakeholder expectations plus their perceptions. Next they must determine both the current capabilities and capacity of all internal audit staff and the existing audit processes.

Other essential short term requirements are to understand:

the calibre of the IA team, the status of the current audit plan (plus when a refresh is scheduled) the department budget.

—Author: Ian Beale

FATCA LOOMS: AUDITORS NEED TO PLACE IT ON

THEIR RADAR FATCA is the Foreign Account Tax Compliance Act, a new United States (US) law aimed at foreign financial institutions (FFIs) and other financial intermediaries to prevent tax evasion by US citizens and residents through use of offshore accounts. Essentially, FATCA is aimed at identifying US persons with financial assets outside the US by requiring US financial institutions and non-US financial institutions to identify account holders and other payees that may be US persons. However, it will affect foreign financial institutions on US source payments made after December 31, 2013. Mercifully, however, withholding requirements will be implemented in stages commencing January 1, 2014. Generally, FFIs will be required to enter into an agreement with the IRS in order to avoid a 30 per cent withholding tax on "withholdable payments" which includes all US source income and gross proceeds from sale or disposition of any property of a type that can produce interest or dividends from US sources. Withholding may also apply to non-US source payments because of the "passthru payment" concept. FATCA imposes three main obligations on foreign financial institutions, and sizable investments will be needed in three key areas: 1. Documentation: capturing process changes and

analysing the customer base. 2. Withholding: building functionality for

withholding on recalcitrant account holders. 3. Reporting: building and sustaining an annual

reporting model for all US individuals to cover account balances and gross.

Although the FATCA implications are multifaceted, experts have pointed to costs as one of the biggest issues. Christopher Alkan, a journalist based in New York, in an article appearing in ACCA's Accounting and Business, postulated that: “Complying with US dictates will not come cheap. Even after recent efforts by the US to make FATCA less onerous, accounting firm KPMG still expects the new rules to cost financial institutions between $20 billion and $30 billion globally over the coming five years. Meanwhile the US tax authorities are expecting a mere $800 million a year in extra revenue from FATCA.” Auditors (both internal and external), especially those employed to banks, broker, dealers, asset managers, investment funds, insurance companies, credit unions, trust companies and other financial intermediaries are strongly advised to play a lead role in alerting and encouraging entities to place FATCA seriously on their radar.

August 2014 Audi-Wire 7

Professional Centre, Rooms B301/302

#11-13 Fitz Blackman Drive, Wrightson Road Ext.

Port of Spain, Trinidad

Phone: (868) 625-5558 Fax: (868) 623-4560 Mobile: (868) 769-1671

Email: iiatt@flowtrinidad.net

Website: https://chapters.theiia.org/trinidad-and-tobago/Pages/default.aspx

Now you can enjoy Internal Auditor (Ia) magazine in a format that's as mobile as you are. Ia's mobile app includes everything that appears in the print magazine ... and more, including convenient access to Ia blogs, exclusive video content, and the latest audit-related news.

Our print issues are married with articles from real-time content feeds for a seamless, engaging experience on your mobile device. Users can search across more than two years' worth of archives

for topics of interest and bookmark pages for future reference. Each app platform uses native device functionality for optimum performance and readability. Plus, downloaded issues are available for offline reading, and push notifications let you know as soon as new issues become available.

Download the Ia app today — free to Ia subscribers. Available for iPhone, iPad, iPod Touch, Android, and Kindle Fire.

iPad, iPhone, & iPod Touch Google Play (Android Tablets & Phones) Kindle Fire

IaMobileEditionGetConnected

Contact us to submit articles, tell us what training you’re interested in or ask us about getting certified.