Inaccurate Financial Statements - Prevention & Detection of Financial Crimes

The role of the Audit Committee & Internal Auditors

17 February 2015

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FINANCIAL STATEMENTS

BOARD OF DIRECTORS IS RESPONSIBLE FOR PROPER

FINANCIAL STATEMENTS

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FINANCIAL STATEMENTS

ACCOUNTING IS NOT A SCIENCE

IT IS AN ART

4© 2015 KPMG Certified Auditors A.E., a Greek Societe Anonyme and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

FINANCIAL STATEMENTS

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PROTECTION/PREVENTION

• PROPER SYSTEM OF INTERNAL CONTROL AND PROCEDURES

• SAFEGUARDS

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PROTECTION/PREVENTION

BASIS OF A PROPER SYSTEM OF INTERNAL CONTROL AND PROCEDURES:

•PROCEDURES TO ENSURE CAPTURE OF ALL TRANSACTIONS

•PROCEDURES TO ENSURE LIMITATION OF RISK

•PROCEDURES TO ENSURE THAT NO SINGLE PERSON CAN COMPLETE A TRANSACTION WITHOUT THE INVOLVEMENT OF AT LEAST ONE MORE PERSON

•COMPETENT FINANCE DEPARTMENT

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SAFEGUARDS

• INTERNAL CONTROL AUDIT • AUDIT COMMITTEE

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COMMON CHARACTERISTICS OF MAJOR CORPORATE FINANCIAL CRIMES

• INEFFECTIVE BOARDS

• POOR STRATEGIC DECISIONS

• OVEREXPANSION AND ILL-JUDGED ACQUISITIONS

• AUTOCRATIC / DOMINANT CEOS

• GREED, HUBRIS AND A DESIRE OF POWER

• FAILURE OF INTERNAL CONTROLS

• INADEQUATE REMUNERATION SYSTEMS

• POOR REGULATION

• LACK OF INVESTOR QUESTIONING

(Hamilton 2009 & Centro de estudos em Governança Corporativa 2010)

Thank you

Marios T. Kyriacou

© 2015 KPMG Certified Auditors Α.Ε., a Greek Société Anonyme and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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