Deloitte Forensic Webinar Series COVID-19 Financial …€¦ · 07/07/2020 · •Effective...

Deloitte Forensic Webinar SeriesCOVID-19 Financial misstatement and misreporting7 July 2020

Mitigating fraud and misconduct Mitie © 2020 Deloitte LLP. All rights reserved. 2

Agenda for the session

Welcome

1Welcome and introduction

5Summary and close

2The risk environment and potential issues

3Governance and external pressures

4Mitigating the risks


Welcome and introduction

COVID-19 financial misstatement and misreporting

Deloitte ForensicPartner

[email protected]

+44 20 7303 2905

Peter MaherJules Colborne-Baber


[email protected]

+44 20 7007 2020

Peter MaherSimon Cuerden

Deloitte ForensicDirector

[email protected]

+44 20 7303 2535

Peter MaherRob Wylie


[email protected]

+44 20 7007 3169

Peter MaherAmber Andrade

Deloitte Risk AdvisoryDirector

[email protected]

+44 161 455 6715

Peter MaherJames Meadowcroft

Deloitte Forensic Assistant Director

[email protected]

+44 131 535 7078

Peter MaherRosemary Ford

© 2020 Deloitte LLP. All rights reserved. 4

The risk environment and potential issues


The COVID-19 landscape brings with it a number of challenges which increase the likelihood of financial misstatement and misreporting


Potentially leads to

Restrictions on travel

Resource challenges

Remote working and lockdown

Pressure

Opportunity

Rationalisation

Revenue and liquidity issues

Challenges


Potential issues


Manipulation of impairments, write-offs and

provisions

Inappropriate capitalisation of expenses

Failure to discloseCovid-19 impact

Overstatement of revenue

Using Covid-19 to mask

unrelated issues

Manipulation of models, forecasts

and KPIs


Governance and scrutiny


Governance


Primary responsibility for prevention and detection of fraud rests with those charged with governance and senior management.In the UK, this is expressly recognised in both:

1) Paragraph 4 of International Standards on Auditing 240; and

2) Code Principle C of the UK Corporate Governance Code which states that the board should establish a framework of prudent andeffective controls which enable risk to be assessed and managed

The Brydon Report recently recommended that there be:

1) a new reporting duty on directors to set out the actions they have taken each year to prevent and detect material fraud; and

2) a corresponding new duty on the auditor to state in its report how it has assured the directors’ statement on material fraud, andwhat additional steps it has taken to assess the effectiveness of the relevant controls and to detect any such fraud.

Boards need to ensure they are managing financial statement misstatement, fraud and misconduct risk with appropriate robustness.


External pressures


The board and those charged with governance

Regulatory bodies

Auditors

Shareholders

Banks


Mitigating the risks


Practical steps to mitigate the risks


Fraud follows opportunity and attacks weakness.Know where you are vulnerable and how to take control.

Update fraud risk assessments

Have robust internal controlsKeep clear records

Stress test forecasts

Monitor effectiveness and remediate where required

Set a tone from the top and provide clear communication


Summary and close


Summary and close


3But, there are practical steps you can take to mitigate the risks• Management should act now to assess the heightened risk of financial misstatement and misreporting• Effective governance, fraud risk assessments, monitoring and surveillance will help to prevent and detect any such issues

1The risk landscape has changed• COVID-19 has brought with it increased pressure, opportunity and rationalisation for fraud and misconduct • There are a number of key risk areas specifically relating to financial misstatement and misreporting

2There is currently increased scrutiny on boards and management• Management and the board have a crucial role to play in the prevention and detection of these issues • External stakeholders have been vocal about what they expect from companies


Today's speakers

We are happy to facilitate a peer-to-peer virtual meeting for round table style discussion on those issues covered today, or any that are specifically

impacting your business.


[email protected]

+44 20 7303 2905

Peter MaherJules Colborne-Baber


[email protected]

+44 20 7007 2020

Peter MaherSimon Cuerden


[email protected]

+44 20 7303 2535

Peter MaherRob Wylie


[email protected]

+44 20 7007 3169

Peter MaherAmber Andrade

Deloitte Risk AdvisoryDirector

[email protected]

+44 161 455 6715

Peter MaherJames Meadowcroft

Deloitte Forensic Assistant Director

[email protected]

+44 131 535 7078

Peter MaherRosemary Ford

Please contact us if this is of interest to you and we will arrange.

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.

Deloitte LLP is the United Kingdom affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

© 2020 Deloitte LLP. All rights reserved.

Designed by CoRe Creative Services. RITM0446158

Deloitte Forensic Webinar Series COVID-19 Financial …€¦ · 07/07/2020 · •Effective...

Documents

Transcript of Deloitte Forensic Webinar Series COVID-19 Financial …€¦ · 07/07/2020 · •Effective...