The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 1

1. President’s January Message

Happy New Year!

Welcome back from the break. January is always a bit hectic just making sure we are on top of the Audit Plan and other changes that were rolled out at the beginning of the year. Hopefully, we can all get a half day away from that to focus on the new changes within the profession. Our Chapter Program on January 20th will cover important updates to the COSO model and the IPPF standards. We have excellent speakers to cover these important topics. Thank you to Nick DiMola, Paul Flora and Michael Fucilli. This team will prepare us for the changes we need to be aware of.

1. President’s January Message

2. COSO UPDATE SEMINAR

3. Academic Relations Report ~ scholarship & internship opportunities~

4. December Seminar Recap

5. CPE Certificates/Surveys

6. Where is Internal Audit Headed in

5, 10, 20 Years– Article by Russ Safirstein

7. Chapter 2017 Programs

~ End-of-Year Dinner May 19th ~

8. Certification & Training News

~ NYC April 4 thru 7 Seminar s Featured ~

9. Fraud Stuff - ‘Corruption’ -

Article by Ernie Smith

10. LI Chapter Officers & Board

11. Chapter Volunteers Needed

~ volunteers see also section 3 ~

In This Issue

COSO Update January 20, 2017 Melville Marriott

* * *

Data Analytics & Continuous Monitoring Strategies

February 17, 2017 Melville Marriott

* * *

Annual IT Conference March 24, 2017 Melville Marriott

* * *

For more information go to: http://www.theiia.org/chapters/index.cfm?cid=241

Visit the website above and click on News and Jobs

Visit the website above and click on News and Jobs

Vi

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Up Coming Events

Local Career Opportunities

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 2

1. President’s January Message ~ continued ~ Thank you to the many people who have responded to our member survey. This feedback will help us plan for next year. If you haven’t already responded, you can find the link to the survey here https://www.surveymonkey.com/r/ZQCKY9H We have good news regarding the end of the year dinner. We will open registration in CVENT at the end of January so that everyone is able to plan accordingly. It will be on Friday May 19, 2017. More information regarding the event is contained in this Newsletter. We also just received unexpected news. Mr. Richard Chambers can’t make our Annual Meeting on April 21, 2017. We are working on the alternative dates he gave us with the speakers we have as well as other alternative Key Note Speakers. We may not have all of it nailed down before this edition of the Newsletter is released. Therefore, as soon as we have the new information that will be circulated through CVENT. We apologize for the inconvenience.

Thank you for all you do for the chapter and for your support. Best regards,

Ellen R. Caravella, CPA/CIA

Internal Audit Director

Adelphi University Levermore Hall Suite 306

One South Ave.

Garden City, NY 11530

(516) 877-3283 ph. * * * Don’t forget to follow us on the LI Chapter Twitter account: @IIALIchapter. * * *

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 3

2. Revised IPPF Standards and The COSO Update

Revised IPPF Standards and The COSO Update – What Every Auditor Needs to Know Friday, - - - January 20, 2017 – Melville Marriott

8:30 a.m. – 12:00 p.m. - - - (4 CPE/CPD Credits)

Introduced below are our distinguished speakers for this COSO Update Program

Nicholas DiMola,

CPA, CCA Paul J Flora, CFE, CFSA, CCA

Michael J. Fucilli, CIA, QIAL, CRMA, CGAP, CFE

Synopsis of program speakers//schedule follows – registration info end of section

8:30.a.m. – 10:15 a.m.

What You Need to Know Now About the Revised Standards and their Impact on Audit Quality

The International Professional Practices Framework mandatory guidance is reviewed every three years. This session will discuss the revisions and additions to the Standards that will take effect on January 1, 2017. Additionally, the session will explore the effect of these changes on Quality Improvement Programs and Quality Assurance Reviews Nicholas DiMola, CPA, CCA is the co-founder and a Principal at Quality Plus & Associates (QP&A), an internal audit service firm. QP&A was established in 2007 and specializes in providing reviews of internal audit functions and activities, as well as providing internal audit training. Mr. DiMola has over 35 years of financial and internal audit experience in the transportation and government sector. He served 6 years as Vice President and CFO for the MTA Long Island Rail Road, and over 20 years as the Chief Audit Executive the the Metropolitan Transportation Authority (MTA), the largest public transportation company in North America. Mr. DiMola received his B.B.A. in Accounting from Baruch College in NYC and his MBA in Finance from St. John’s University. He is a member of the A.I.C.P.A and the Institute of Internal Auditors (IIA). He currently serves as a member of the IIA NY Chapter Board of Governors and was a past President of the Chapter. He also remains active with the IIA in its international committees and had the privilege of serving as the Co-chair of the IIA 2016 International Conference.

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 4

2. Revised IPPF Standards and The COSO Update ~ continued ~

Mr. DiMola is a Certified Construction Auditor (CCA), co-developed a construction audit course that he teaches for the IIA, and is a frequent speaker at IIA conferences. He was inducted to the IIA’s North American Hall of Distinguished Audit Practitioners, in March 2014. Mr. Paul J Flora, CFE, CFSA, CCA is the co-founder and a Principal at Quality Plus & Associates (QP&A), an internal audit services firm. QP&A was established in 2007 and the firm specializes in providing reviews of internal audit functions and activities, as well as providing internal audit training. Mr. Flora has over 40 years of internal audit experience in the financial services industry. He retired in 2007 after 14 years as the Chief Audit Executive of AXA Financial. He is a member of several professional associations, is a past President and currently serves on the Board of Governors of the IIA NY Chapter, was a member the IIA’s Financial Services Advisory Board, and the IIA’s Learning Solutions Committee, and had the privilege of serving as the Co-chair of the IIA 2016 International Conference. Mr. Flora was a member of the Audit Committee of the American Nurses Association and is also a retired Lt. Colonel is the US Army Reserve. Mr. Flora is a Certified Construction Auditor (CCA), co-developed a construction audit course that he teaches for the IIA, and is a frequent speaker at IIA conferences.

10:15 a.m. – 10:30 a.m. - - - BREAK

10:30 a.m. – 12:00 p.m.

The World Through the Eyes of COSO Yes, auditors have heard of COSO but do they really know how to apply it in their audits? This practical and entertaining session will use current events in business and even in our social lives to provide a practical understanding and application of the COSO Framework. This session will discuss how to transcend to a Strategic Advisor to your Company using the COSO model and what COSO really means to Internal Audit Departments.

Michael J. Fucilli CIA, QIAL, CRMA, CGAP, CFE, is the Chief Audit Executive for Metropolitan Transportation Authority with revenues in excess of $15 billion. Mike has 37 years of internal auditing experience that includes Financial Services, Public Sector, Inventory Management, and Technology and SOX Reporting. Mike has an audit staff of 85 professionals and is on the IIA’s Internal Audit Foundation Board of Directors. He recently served on the IIA North American Board and Global Board. Mike is a passionate and energetic speaker, receiving very high ratings by participants.

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 5

2. Revised IPPF Standards and The COSO Update ~ continued ~

REGISTRATION INSTRUCTIONS

Friday, January 20, 2017 Half-Day Program

Check-in and breakfast begin at 8:00 a.m. Program begins at 8:30 a.m. The session will end at approximately 12:00 p.m. Lunch will be served immediately following the program.

Participants will earn 4 CPD/CPE Credits. Dress is business casual.

How to Register: Please use the following online registration link: http://www.cvent.com/d/tvqttd/4W

If you are having trouble with the link, notify Marco Dias at marcodias.auditor@gmail.com. Cancellations must be made at least 24 hours prior to the event by contacting Rocky Shankar at rocky.shankar@pseg.com.

For Making Payments Offline: You should register online (see above). In the payment section, select “check” or "other." If not registering online, please contact us at LIIIA@nsllpcpa.com or call Ellen Caravella at 516-877-3283 at least 24 hours before to reserve your seat. Then complete and enclose this registration form, along with your check made payable to the IIA Long Island Chapter, and mail to: Institute of Internal Auditors LI, P.O. Box 442, Smithtown, New York 11787 or bring it day of the seminar.

Name(s) IIA Member

$90 Each

Non Member

$115 Each

Student

$30 Each

No. of Prepaid

Subscriptions

Applied

CPE

Y/N

CPD

Y/N

Total $ $ #

Company Name: _______________________________________

Address: ________________________________________

Phone Number: ________________________________________

E-Mail Address: ________________________________________ Directions to the Melville Marriott: From New York City: Take Long Island Expressway (Route 495) to Exit 49 South. Take the ramp (right) onto the South Service

Road. Turn left (North) onto Old Walt Whitman Road (Walt Whitman Road).

From Eastern L.I.: Take the Long Island Expressway (Route 495) to Exit 49 North. Take the ramp (right) onto the North Service

Road. Turn right (North) onto Old Walt Whitman Road (Walt Whitman Road).

In case of weather emergency, the Melville Marriott phone number is: (631) 423-1600

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The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 6

3.

Chapter ARC ( Academic Relations Committee ) News

ACADEMIC RELATIONS COMMITTEE– 2016 HAPPENINGS & 2017 FOCUS – Hello Fellow Long Island Chapter Members and Happy New Year, As Co-Chairs of the Academic Relations

Committee (fondly referred to as ARC) we wanted to take this opportunity to bring you up to speed with what

the ARC has been up to since forming in early 2016.

MISSION: First we will let you in on what the ARC is all about. Our mission is to promote awareness

amongst students and educators about the internal audit profession and provide support in the form of

educational materials, mentoring opportunities, presentations and information about internship and scholarship

opportunities.

2016 HIGHLIGHTS: So, “What have we been doing all year?” We are happy to report that we have

achieved some important goals. During 2016 the Committee focused on providing scholarship and internship

opportunities to benefit students attending our local colleges and universities. On the scholarship front we

currently have established $1,000 annual scholarships at four Long Island colleges/universities including

Adelphi, Hofstra, SUNY Old Westbury and SUNY Stony Brook. The scholarship recipients will be selected by

each school and are available to full time students majoring in Accounting who achieve an overall GPA of 3.5

and demonstrate financial need as determined by the school.

As to internships, we were also successful in establishing key contacts at local colleges and universities

enabling us to communicate summer internship opportunities available at LI based companies resulting in the

hiring of 2 students.

2017 FOCUS: That brings us to what we will focus on in the year ahead. In 2017 our focus will be on

working to build stronger relationships with our local colleges and universities both at the faculty and student

level in order to raise awareness of the Internal Audit profession including scheduling student presentations and

faculty events. We will also expand our scholarships efforts by rolling out a competitive essay scholarship

award available to students attending Long Island colleges and universities. YOUR HELP: We could always use more help. We will be working on developing a group of folks who

would be willing to make student presentations. If you have ever wanted to get involved more with our Chapter

but felt you didn’t have the time, volunteering as a presenter at some of our upcoming student presentations is a

great way to give back. Helping with this does not require much time and can be a very rewarding experience.

The more volunteers we have the more presentations we can do to promote our profession by spreading the

word of INTERNAL AUDITING! Want to get involved? Just send an email to liiia@nsllpcpa.com and put the

words “ARC Volunteer” in the title of the email or we will have a sign-up sheet available at the registration

desk of upcoming seminars.

Regards,

Lauren Nichols Roy Garbarino Co-Chair, ARC Co-Chair, ARC

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 7

4. ~ December Risk Sensing Conference Recap ~

Following summary information is provided by Rocky Shanker

The Risk Sensing Conference held on December 16th, the Chapter’s final event of 2016, was attended by 83 individuals. This conference was geared towards providing attendees with the 5 CPE credits needed to fulfill the CRMA annual requirement. The session commenced with a presentation on Risk Sensing by Nabarun Sengupta and Ben Horton of Deloitte. They were followed by a Chief Risk Officer panel discussion which focused on the Risk Officers’ roles, their reporting superiors, and their relationship with Internal Audit and the Audit Committee. The panelists included Frank Fonzo of the Estée Lauder Companies, William DiSalvatore of New York Community Bancorp, Lamond Kearse of Metropolitan Transit Authority, and Richard R. Gomes of Citigroup. Last, but certainly not least, the day’s session concluded with Ravin Catlin, an internationally recognized Internal Audit expert, providing some valuable insights to help the attendees gain a better understanding of Risk Management.

Feedback comments provided by meeting attendees were positive and their learning objectives were met.

5. Chapter Seminar CPE Certificate & Survey Change

Important Note for Seminar Attendees: - - - Going forward all Seminar attendees will receive one post training session Email from our CVENT communication system - - - This Email will have links to both your CPE Certificate ( which you may print-out) and a survey questionnaire pertaining to your opinion on the seminar. Please use the survey questionnaire to rate the speaker(s), program content and any other comments on the seminar. Additionally, if you have recommendations on future topics and speakers, or wish to volunteer for a Chapter committee, enter this information also. IMPORTANTLY your filling out of the survey form may be of value to the Chapter in the future – AND to you immediately – as all filling out a survey will be entered in a monthly random drawing for a $50 gift card. - - - Good-luck ! NOTE: The winner of the post-meeting survey for December was Shari Diamond of Cerini and Associates.

6. Where is Internal Audit Profession Headed in 5, 10, or 20 Years?

WHERE IS THE INTERNAL AUDIT PROFESSION IS HEADING IN 5, 10

OR 20 YEARS FROM NOW ?

The following article is supplied by Russ Safirstein, a Governor on our Long Island Chapter Board. This article datelined New York,

NY November 23, 2016: Paracon Group, Inc., a business transformation firm that uses knowledge automation and advanced analytics

powered by Expertool , comments on the future of Internal Audit follow:

( article continued on next pag )

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 8

6. Where is Internal Audit Profession Headed in 5, 10, or 20 Years? ~continued ~

We believe internal audit will remain a very important function in the future. Stricter regulatory requirements,

stakeholder needs and the continued fraud, waste and abuse that occurs globally to start. It’s a statutory

requirement in many parts of the world to have an internal audit function. The global recession, corporate

failures, banking crises, money laundering, corporate fraud, cyber-attacks, volatile market and disruptive

innovation, etc. all necessitate the need for an internal audit function in the future as well.

WHAT CAN INTERNAL AUDITORS DO TO EQUIP THEMSELVES AND

REMAIN COMPETITIVE AND EFFECTIVE AS VALUE ADDING LEADERS

IN THE ORGANIZATION? There is a need to change the mindset of the auditor. Our primary purpose is to help the organization to achieve

its objective. Mostly, internal auditors are more focused on how to audit rather than why to audit. It’s up to the

internal auditor, to choose to act like a doctor or a police officer or strike a balance between both. How to audit

raises the element of independent and objective. How to audit also demand to consider several factors such as

the nature of the business, industry norm, management style, internal culture, control environment etc.

WHAT WOULD BE THE BEST STARTING POINT FOR AN INTERNAL

AUDITOR TO MOVE TOWARDS BECOMING

A TRUSTED STRATEGIC ADVISER TO THE BUSINESS? In future, the most successful audit professionals will be the one, who embrace the change and be ready to adapt to tackle new

challenges of future risks. The traditional approach is required, but in the current volatile environment, we have to have more

innovative ideas and approach to safeguard the interest of shareholder/stakeholder. May be that’s one of the reasons that IIA

revised the internal audit definition, which encompass along with audit assurance, advisory role as well. In the very near future

the audit professional will dramatically move from periodic to continuous audit, from manual or semi-automated to fully

automated controls, from sampling to a 100 % population review, from providing assurance on historical data to providing

assurance on emerging risk, from assessing business continuity to ensuring business resilience, from improving efficiency to

recommending changes and innovation.

HOW AUDITORS CAN EQUIP THEMSELVES? It’s simple - be open, be welcoming, be informed, be flexible. In terms of technical skills, auditors should be aware of its

surroundings, be its industry knowledge, global issues, political turmoil or disruptive innovation. It is important for auditor to

study its impact on the business e.g. bit coin, driver-less cars, Hyper-loop travel, 3D construction printing, data transfer,

hydroponics farming techniques etc. IN terms of interpersonal skills, the auditor can improve their communication,

presentation, leadership and human psychology skills, without which it’s difficult to achieve desired objectives.

--------------------------------------------------------------------------------------- Paracon Group, Inc., founded in 2010 and headquartered in New York with additional offices in Illinois, Indiana and Connecticut,

provides next generation business intelligence, technology and expertise to numerous industries and consultancies across the United

States. Knowledge Engineering services are powered by Expertool, an in memory analytics and universal modeling platform coupled

with innovative knowledge automation mapping methodology and technology. Forensic Audit services focus on traditional forensic

accounting services and specialized health plan audits using the full power of ERISA and the ACA. Project management staffing and

consulting expertise services provide co-sourcing or outsourcing for temporary or full-time staffing needs. See more information at

www.paracongroup.com

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 9

7. Chapter 2017 Program Information

Shown immediately below is a schedule of events remaining in our Chapter’s 2017 program year. Please note that the April annual Chapter meeting has a yet to be finalized date – see information on this in the President’s January Letter – section 1 of this newsletter. Note that our annual chapter dinner is planned for the 19th of May . General information on our seminars is also included in this section.

Date/Location Format/

CPE/CPDs Topic Prices

January 20, 2017

Friday Melville Marriott

Half Day (8:30AM to 1:00PM)

(Breakfast and Lunch) 4 CPE/CPDs

COSO Update

Member - $90

Non-member - $115 Student - $30

February 17, 2017

Friday Melville Marriott

Full Day

(8:30AM to 5:00PM) (Breakfast and Lunch)

8 CPE/CPDs

Data Analytics and Strategies for

Continuous Monitoring

Member - $175

Non-member - $225 Student - $30

March 24, 2017

Friday Melville Marriott

Full Day

(8:30AM to 5:00PM) (Breakfast and Lunch)

8 CPE/CPDs

Annual IT Conference

Member - $175

Non-member - $225 Student - $30

April 2017

Friday Melville Marriott

Full Day

(8:30AM to 5:00PM) (Breakfast and Lunch)

8 CPE/CPDs

Annual Conference

~ Date to be announced

Member - $175

Non-member - $225 Student - $30

ANNUAL CHAPTER DINNER will be held on MAY 19th, 2017

from 6 to 10pm - - - $75 per person ~ venue to be announced

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 10

End-of-Year Dinner Dance Friday, May 19th, 2017

Stewart Manor Country Club

51 Salisbury Avenue Stewart Manor, NY 11530 www.StewartManor.com

$75 per person

6 p.m. – Cocktail Hour 7 p.m. – 10 p.m. – Dinner and Dancing

OPEN BAR – DJ – GAMES

Registration will be sent out by CVENT in January 2017

Join us for a fun evening of music and entertainment in addition to our traditional affairs!

Mark your calendar…you won’t want to miss it!

We hope to see you there!

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 11

7. Chapter Program Information ~ continued ~

Details for Attending the Long Island Chapter Monthly Seminars

Please refer notes outlined below for details on our Seminar Time, venue, dress-code,

breakfast/lunch offerings and other details pertaining to all program offerings.

This information is supplied to aid in use of the Chapter Program schedule. Please note

that every effort is made to accommodate the needs of all attendees. Contact any Chapter officer/board member with your comments and needs to make programs a

professional experience.

Continental Breakfast - is served at 8:00 AM

Lunch - is usually served at 12:30 PM

Dress - is Business Casual

Venue – All program events are held at the Melville, Marriott in Melville, Long Island.

There is ample on-site parking and the Marriott is convenient to Old Country Road, the Northern State Parkway, Long Island Expressway and Route 110. This site has been

chosen to be convenient to the busy schedules of program attendees, for the professional tone of presentation areas and the quality of dining facilities and services.

Program Cancellation - Over the years, only a few cancellations have taken place – (hurricanes, snow days). A direct telephone number to the Marriott, provided to avoid

trips to a closed facility is (631) 423-1600. All events are rescheduled.

Registration for individual events - Generally opens 20 days before each event. Registration information is emailed to Chapter members and will appear in the Chapter

Newsletter. For more information go to OUR Chapter website: http://www.theiia.org/chapters/index.cfm?cid=241

CPE/CPD Certifications – Attendees who participate in a program will receive a

CPE/CPD certificate and be registered to receive credit for use in their certification needs as appropriate. NOTE: See section ‘5’ of this newsletter for new certificate process.

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 12

8. Certification & Training News

Long Island Chapter CIA & Related Certifications Noted

There were no reported Chapter recipients of Certifications during the past month. Please notify us if you have received a Certification and we have not acknowledged your

accomplishment. There are many Long Island Chapter members in-process of gaining certifications – good-luck to you in your studies !

Forgot to Report Your 2016 CPEs by the 2016 – December Deadline ? ? If you forgot to Report your CPEs by the DECEMBER 31, 2016 deadline sign on to CCMS,

via IIA website > www.theiia.org < , as soon as possible to advantage yourself of the soon to end grace period to keep your IIA credential(s) in good standing.

Internal Audit Courses in New York City! Earn up to 32 CPEs and develop your internal auditing skills by attending IIA sponsored

courses in New York City April 4-7, 2017.

Register by February 10th and Save US $250.

Critical skills and cutting-edge technologies will be covered in the following course areas:

• Analyzing & Improving Business Processes

• Audit Manager Tools and Techniques

• Beginning Auditor Tools and Techniques

• Communication Skills for Auditors

• COSO Internal Control Certificate

• Operational Auditing: Influencing Positive Change

•

~ ~ For complete info - & registration materials – access: www.theiia.org/seminars ~ ~

Note: Contact Biju Beegum at Biju.Beegum@cardworks.com to report certifications earned, or questions on training systems or

course offerings.

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The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 13

9. FRAUD STUFF … from the LONG ISLAND CHAPTER of the IIA

By: Ernest Patrick Smith, CPA/ABV/CFF, CFE, CVA

Senior Partner-Nawrocki Smith, LLP-Certified Public Accountants and Business Consultants

(P) (631)-756-9500 ext. 223/(C) 516-659-5151 - - - (E-mail) epsmith@nsllpcpa.com

* * *

Many best wishes to all as we begin this New Year with the winds of change hanging in our

balance…

We had nice change this past Fall in that we had our annual Fraud Conference in November

(Wednesday, November 16, 2016) a switch from our past years of having this annual event in

February. It was a packed agenda covering the many current fraud issues of our world today

starting with our outstanding keynote speaker, NYS Comptroller, Tom DiNapoli followed by our

first ever (and quite engaging!...) healthcare presenter, award winning investigator Bruce

Sackman. Peter Grupe, former FBI presented on the latest in survey results as to White Collar

Crime and what the hot buttons are in terms of its existence. Sadly, we learned just how

pervasive its presence is in our world today as evidenced by the survey results. Batting cleanup

and anchoring our day was Attorney John Cooney, former Marine, classically trained software

engineer from Columbia University turned all-Cyber legal expert who, along with his colleague,

Attorney Nicole Della Ragione, gave us an unforgettable afternoon of discussion and debate

surrounding the current state of Cyber fraud and its impact on our world today. This was truly

one of our best Fraud Conferences ever and we expect to continue it next year as part of our Fall

Classic of educational events from our Long Island Chapter.

To begin our year and in light of the many issue we have faced locally and the changes about to

take place nationally I thought a focus on the basic topic of Corruption was in order.

Corruption is one of the oldest white-collar crimes known to mankind. The tradition of “paying

off” public officials or company insiders for preferential treatment in the crudest business

systems developed. The overview presents as follows (and I will touch on each for your review…)

1. Extortion and bribery schemes

2. Conflict of interest schemes

3. Economic extortion schemes, and

4. Illegal gratuity schemes

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 14

Bribery, is any scheme in which a person offers, gives receives or solicits something of value for

the purpose of influencing an official act or a business decision without the knowledge or consent

of the principal.

Bribery schemes fall into two broad categories; kickbacks and bid rigging schemes.

Kickbacks are undisclosed payments made by vendors to employees of purchasing companies and

are usually made payable in cash. The purpose of a kickback is usually to enlist the corrupt

employee in an overbilling scheme. Bid rigging schemes occur when an employee fraudulently

assists a vendor in winning a contract through the competitive bidding process. Again, such

payments are usually in cash thus making them difficult to detect. This process, in which

several suppliers or contractors are vying for vying for contracts in what can be a cutthroat

environment, can be tailor-made for bribery. Any advantage one vendor can gain over his or her

competitors in this arena can be extremely valuable. The way competitive bidding is rigged

depends largely upon the level of influence of the corrupt employee. The more power a person

has over the bidding process, the more likely the person can influence the selection of a supplier.

In summary, employees involved in bid-rigging and kickback schemes have a good measure of

influence over or access to the bidding process. The fact that nearly all of these schemes involve

cash payments adds another level of complexity in the discovery of the existence of these types of

schemes.

Examples:

Vendor provides a manager with a bribe to secure a sales contract

Employee receives payment for securing a contract

Conflict of Interest schemes any scheme in which an employee, a manager, or an executive has

an undisclosed economic or personal interest in a transaction that could adversely affects the

company or entity. As with other corruption schemes, conflicts of interest involve the exertion of

an employee’s influence to the detriment of his or her company. Conflicts almost always involve

self-dealing by an employee. In some cases, the employees act benefits a friend or relative, even

though the employee receives no financial benefit from the transaction. To be classified as a

conflict of interest scheme, the employee interest in a transaction must be undisclosed. If the

employer knows of the employee’s interest in a business deal or a negotiation, there can be no

conflict of interest, no matter how favorable the arrangement is for the employee.

Example(s):

Manager establishes a beneficial relationship with an organization in which he or she has

a personal financial or other related type of interest.

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 15

Economic Extortion is the coercion of another to enter into a transaction or deliver property

based upon a wrongful use of actual or threatened force, fear or economic duress. This along with

illegal gratuities occur infrequently and are usually quite small. Economic extortion is basically

the flip side of a bribery scheme. Instead of a vendor offering a payment to an employee to

influence a decision, the employee demands a payment from a vendor in order in order to make a

decision in a vendor’s favor. Extortion is similar to illegal gratuities but always involves the use

of actual or threatened force, fear, or economic duress. Extortion is a criminal offense, which

occurs when a person either obtains money, property, or services from another through the

coercion or intimidation or threatens one with physical or reputational harm unless he or she is

paid money or property.

Example(s):

Vendor threatens an executive (decision-maker) into a specific course of action.

Illegal Gratuities is any scheme in which a person offers, gives, receives, or solicits something

of value for, or because of an official act or business decision without the knowledge or consent of

the organization. Illegal gratuities are also similar to bribery schemes, except that there is not

necessarily an intent to influence a particular decision but rather to reward someone for making

a favorable decision. Illegal gratuities are made after deals are approved.

Example(s):

Manager is influenced to make a financial decision based upon undisclosed gifts or

awards.

As we enter this New Year and the winds of change besiege us we hope that the “swamp(s) will

be drained” everywhere (locally and nationally) and that we all are able to gain a greater

confidence in those that we have chosen to be our fiduciaries in every aspect of our lives.

NEXT MONTH: - CONSUMER FRAUD --------------------------------------------------------------------------------------------------- Note: Ernest Patrick Smith, a past president of our chapter and the resident SME on fraud, pens an

original article from time-to-time for the newsletter on fraud – as the topic is always timely and often new

to the literature the column is entitled “Fraud Stuff”

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 16

10. Long Island Chapter 2016–17 Officers and Board of Governors

IIA - Long Island Chapter 2016 – 2017 Officers & Board of Governors

Executive Board Title

Ellen Caravella President

Maria Michaelson EVP & Treasurer

Lauren Agunzo VP & Asst. Treasurer

Marco Dias VP & Chief Information Officer

Rocky Shankar VP & Operations Officer

Brian Austin VP & Membership

Marshall Lieberman VP & Secretary

Board of Governors

Ernest Patrick Smith Past President

Robert McNair Past President

Biju Beegum Governor

Brian Blisard Governor

Lucille Brower Governor

Vincent Colletti Governor

Roy Garbarino Governor

Ronald Goldman Governor

Pinak Guha Governor

Larry Karp Governor

Prabhat Kumar Governor

Michael Lanning Governor

Joel Lanz Governor

Joyce Larson Governor

Carolyn Leahy Governor

Lauren Nichols Governor

Fred Piulson Governor

Andrea Reece Governor

Russ Safirstein Governor

James Shiveley Governor

Alice Seoylemezian Governor

Bob Skirkanich Governor

Chris Wright Governor

District Representatives

Raquel Marin-Oquendo District Representative

Neil Frieser District Advisor

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 17

10. Long Island Chapter 2016–17 Officers and Board of Governors ~ continued ~

Committee Members

Dawn Scala Historian

Lauren Agunzo Website Administration

Biju Beegum Certification Committee

Lauren Nichols and Roy Garbarino Academic Relations Committee (ARC)

Bob Skirkanich Communications

11.

Call for Chapter Volunteers ~ All Committees Seeking Help

Our chapter program year extends from September to May yearly - - - However, the work-effort to prepare programs, schedule speakers, reserve facilities, upgrade visual aids & audio equipment, develop academic liaisons, register members, initiate employment contacts in the industry, and a myriad of activities goes on throughout the calendar year. This statement is in the way of a warning - - - we are looking for volunteers to aid the Chapter’s activities in all areas – but know there may be a lot of associated work ! - - - The benefits of volunteering will more than compensate for your time – meeting other chapter members and networking with personnel and organizations you interface with will be at the very least interesting, and almost always a career and skill enriching experience.

All Long Island Chapter committees are seeking help ! Please contact any board member – or our Chapter President - Ellen Caravella at ecaravella@adelphi.edu for information. When attending our Chapter monthly seminars ask any of the volunteers and/or Board members at the meeting about available opportunities to volunteer. Specific calls for volunteers will be detailed in future newsletters and on the Chapter website.

See section 3 of this newsletter for a request for help from the academic committee – as well as an outline of their mission and activities to date ! Our newsletter needs help also – not just for the poof raeding of articles – but the journalistic activites of interviews, seminar reports, and the occasional ‘stop-the-presses’ scoop (none of these yet !).

A call for Free-Lance Photographers at our monthly meetings has been issued ! - - - If your personal

assistant device has a camera – and very few do not – please take photos of the happenings and forward them to Ellen at ecaravella@adelphi.edu for review and publication in the newsletter, website and other Chapter materials - - - selected photos will include byline recognition of submitting photographer.

Following below are the committees our chapter has in place thru date - - and the contact information for the chairs. Please contact an area of your choice if you wish to volunteer - - most ‘work’ is actually Email or the old fashioned ‘tely’ - - . Also – note the areas of each committee and contact the Chair if you only have suggestions for their topic area.

The Institute of Internal Auditors

LONG ISLAND CHAPTER

NEWSLETTER

Volume 17 * January 2017 * Issue 5

Page | 18

11. Call for Chapter Volunteers ~ All Committees Seeking Help ~ continued ~

~ List of Long Island Chapter IIA Committees ~ January 2017 ~

Committee Chair (s) Contact Information 1 Committee

Commitments/Accountability (Volunteers)

Alice Seoylemezian/Pinak Guha

Alice Seoylemezian <a.seoylemezian@ms.com>; Pinak Guha <ppguha@gmail.com>

2 Academic Relations Lauren Nichols/Roy Garbarino

Lauren Nichols <lauren.nichols@hofstra.edu>; Roy Garbarino <rgarbarino@bnl.gov>

3 Membership/Professional Development (Publicity)

Brian Austin Brian Austin <bcaustin@kpmg.com>

4 Communications: Editorial (Newsletter) & Publicity and Public Relations (Website)

Bob Skirkanich/Lauren Agunzo

Robert Skirkanich <skirkbob@gmail.com>; Lauren Agunzo <lagunzo@nsllpcpa.com>

5 Employment Russ Safirstein Russ Safirstein <rsafirstein@paracongroup.com>;

6 Chapter Awards/Achievement (CAP)

Bob McNair Bob McNair<mcnair@bnl.gov>

7 Technology Joel Lanz Joel Lanz <jlanz@joellanzcpa.com> 8 Certification Beeju Begum Beeju

Begum<biju.beegum@cardworks.com> 9 History Dawn Scala Dawn

Scala<dscala@astoriabank.com> 10 Standards Chris Wright Christopher Wright

<christopher.wright@protiviti.com>; 11 Government Relations Bob McNair Bob McNair<mcnair@bnl.gov> 12 Audit– Treasurer Maria Michaelson Maria Michaelson

<maria.michaelson@mynycb.com>

13 Awards– Secretary Marshall Lieberman Marshall Lieberman <MSL53@aol.com>

14 Nominating committee – Past President, Current president, three non-governors

Ernest Smith/Ellen Caravella /xxx/xxx/xxx

Ernest Patrick Smith <epsmith@nsllpcpa.com>; Ellen Caravella <ecaravella@adelphi.edu>

15 Hospitality /Meeting Arrangements-officers

Ellen Caravella Ellen Caravella <ecaravella@adelphi.edu>

16 Speaker’s Bureau Maria Michaelson Maria Michaelson <maria.michaelson@mynycb.com>