Sources : From BusinessWare Solutions Pte Ltd and The IIA R

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2 Definition SIA s Implementation Process Flow Components SIA s Methodology Functional area The Cycle Flexibility in Concept Integration with Audit / Audit Risk Management Samples Conclusion 2

3 Continuous Auditing (CA) - the application of automated tools to perform audit-related activities, including control and risk assessment, on a continuous basis so as to provide assurance on financial and non-financial data within a company; performed by audit. Continuous Monitoring (CM) is the automated feedback mechanism to ensure that policies/processes/systems have been operating effectively as designed and to assess adequacy/effectiveness of controls; performed by management; audit independently evaluates the adequacy of management activities. Sources : From BusinessWare Solutions Pte Ltd and The IIA. 3

4 In SIA s context : - CM was experimented in objective => fraud pattern analysis - periodic & after event check - semi-automated - implement by business area - accumulative transaction data for the period of review 4

5 Periodic data extraction from Production systems Systems Reports Run analyses by process based on pre-defined thresholds/criteria CM Run List of Exceptions Within threshold N Y OK Analyze data for trends & irregularities Review supporting document with process owner Process Owner Review Highlight Follow up / remediation of errors / process improvement N normal Follow-up Y OK 5

6 Environment Production Systems Set of irregularity criteria Tools Live data extraction Audit Data Analysis Tools People Functional Experience Correlation Skill Analytical skill 6

7 1. Developed and implemented by Functional Areas using live transaction data for selected period: Payment HR/Payroll Airline Loyalty program Stations Account receivables Treasury/ Fuel hedging 7

8 2. Cycle Develop Institutionalise Improve Institutionalise Operationally manage Start Internal Audit Internal Audit + Business Units End Business environment 8

9 3. Flexibility in concept i. Fraud / irregularity detector ii. Aid to auditing (large population with similar operational characteristics e.g. Station Audits baggage claims vs flight pattern). The ability to stratify, sort and group data allows for a greater focus on reviewing unusual items. 9

10 4. For efficiency & effectiveness, CM reviews integrate with process audits as well as audit risk management direct internal audit resources to areas that need more attention 10

11 Sample Areas of CM Runs 11

12 CM Vendor Payment sample review queries 1) Summary of vendor transactions & top 30 payment. 2) Top 30 round payment amount. 3) In-sequence reference payment numbers or little gaps in between. 4) Payments to same bank account number(s) but different vendor names. 5) Vendors with abnormally frequent payments. 6) Determine any duplicate (or multiple) payments: i. Same vendor, invoice and amount ii. Same invoice & amount but paid to different vendor, iii. Same vendor, invoice but different amount 7) Identify vendor with frequent changes to bank accounts. sample 12

13 CM FFP sample review queries 1) Extract top w KF accounts with highest number of accruals in a specified period. 2) Extract KF accounts credited with flights flown by various passenger names that are different from the registered account names in a specified period. 3) Check KF accounts with more than x number of flights credited through missing mileage claims in a specified period. 4) Extract KF accounts with more than y number of air redemptions in a specified period. 5) Partner Frequent flyer accounts accrued on SQ flights flown by various passenger names for a specified period. sample 13

14 CM HR/Payroll sample review queries sample 1) Test for duplicate or repeated employee records using employee identification number and unique employee identifiers such as passport number. 2) Compare employee master record against payroll master record for ghost employees. 3) List duplicate / multiple payroll payments to employees in the same pay period. 4) Check for bank accounts that are tied to more than 2 employee names. 5) Check for outlier where employee s salary is greater than the maximum of his salary grade by x times. 6) Review employees paid more than y % of their gross pay in overtime or with the highest average allowance/ot payments. 7) Review employees with frequent bank account changes. 14

15 Conclusion SIA uses CM to facilitate detection of irregularities, noncompliance, and frauds. It may be run independently or integrated with process auditing. We continuously improve/refine test criteria/steps with process review & feedback from auditors and Business users. We look out for additional input to help get rid of false positive. Weaknesses were highlighted to business units to improve/implement controls and monitor risks. They also have to ensure controls remain relevant and effective. We seek possibility of cooperation with other airlines for mutual benefits where useful reference data may be shared. 15

16 Questions? 16

17 CM Payment Top xx Vendors Paid for the period VEN_NOVENDOR_NAME # of RECS L_AMT_SUM L_AMT_MAX L_AMT_MIN 407xxx L_AMT_AVERA GE CUR PAYMENT_ DOC_NO 1 221,535, ,535, ,535, ,535, SGD xxx 401xxx 2 134,906, ,533, , ,453, USD ,114, ,114, ,114, ,114, USD ,153, ,741, ,619, ,717, GBP ,947, ,960, ,971, ,576, SGD back 17

18 Top xx KF accounts with highest points accrued for the period KF_NBR xxxxxx7285 xxxxxx74617 Xxxxxx3997 Xxxxxx7754 Xxxxxx8119 xxxxxx77959 xxxxxx7598 NO_OF_ SEGMENT_ MILES_CR_TO_ NBR_OF_ NBR_OF NAME_ON_CARD RECS COUNT KF FLT _SEGS , , , , & , & , , xxxxxx , xxxxxx , xxxxxx ,

19 One partner FFP account number was provided in various passengers' PNRs during reservation: FFP Account FLT DTE FLT NO SECTOR FAMILY NAME GIVEN NAME CLASS AB Sep-00 SQ116 SINKUL LEE MUIT Y AB Sep-00 SQ345 ZRHSIN YEOW MEYH Y AB Sep-00 SQ149 DPSSIN PATERSON MARK Y AB Sep-00 SQ878 SINKHH CHEAN YEAH Y AB Sep-00 SQ074 SINMNL TASELAAR F Y AB Sep-00 SQ111 KULSIN LEE MUIT Y AB Sep-00 SQ061 BKKSIN SHUEK SING Y AB Sep-00 SQ868 SINHKG CHONG KOKK Y AB Sep-00 SQ063 BKKSIN FREEMAN KEVI Y AB Sep-00 SQ071 MNLSIN TASELAAR F Y AB Sep-00 SQ805 SHASIN TAN YONG Y AB Sep-00 SQ857 HKGSIN ONG AHTO Y AB Sep-00 SQ227 SINMEL TAN SEOK Y AB Sep-00 SQ806 SINSHA BHALLA VIVE Y AB Sep-00 SQ012 SINNRT NIAN TINK Y AB Sep-00 SQ866 SINHKG YAP CHIN Y AB Sep-00 SQ151 CGKSIN GERLSMA S J AB Sep-00 SQ861 HKGSIN CHONG KOKK Y AB Sep-00 SQ975 KIXSIN NIAN TINK Y (AB is made up to replace the actual FFP account, with only first 4 characters of Given Name.) back 19

20 List of employees with different names with the same Bank Account Employee with the same bank account different names S_ID END_DATE START_ DATE CHANGED _ON CHANGED_ BY PAY _ARE COST A _CENTRE ORG _UNIT POSITION JOB NAME 20 BNK_ CTY BANK_ KEY BANK_A CCT /31/9999 9/6/2006 8/21/ S2 ACCD TAN TAN HUI LEE SG WONG WONG KAI /31/9999 3/3/2008 3/5/ S2 AFLT MUN SG /31/9999 4/1/1997 3/17/2002 HRBTCHUSR S2 ACCD GOH GOH KHIAM HUI HENRY SG YONG YONG SIEW /31/9999 1/5/ /26/ S2 ACCD LAN SG /31/9999 6/11/2002 5/17/ S2 ACCD PONNICHI JAMAL PONNICHI SG PONNICHI K PONNICHI KARIMBUV /31/ /1/2001 3/17/2002 HRBTCHUSR S AL SG KUM KUM GAN YUN /31/ /1/2002 9/26/ S2 ACCD LI SG /31/9999 1/3/2005 1/19/ S2 ACCD PUAN PUAN YI ALEX PUAN SG back