Where is Internal Audit, into an increasingly technology-driven, innovation-oriented, risky, and disruptive future!

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The world is entering the fourth industrial revolution and new technologies, digitalization, and artificial intelligence are dramatically changing the business landscape.

That means organisations are hurtling into an increasingly technology-driven, innovation-oriented, risky, and disruptive future. The question is now where is the internal audit? The answer is that, most of the time and despite ongoing efforts to meet stakeholders’ growing list of needs, it’s playing catch-up.

Until recently, the Internal Audit profession has not faced the need to innovate. Internal Audit 1.0 was born with the founding of the Institute of Internal Auditors (IIA) in 1941 while the Sarbanes Oxley Act of 2002 brought Internal Audit 2.0. Along the way, such developments as the COSO framework, improved capabilities such as IT internal audit and data analytics, and supplementary guidance have improved the profession following the global financial crisis.

However, as we approach the end of a decade of unsettling uncertainty, organisations face evolving strategic, reputational, operational, financial, regulatory, and cyber risks. There is also an urgent need for Internal Audit to innovate to the next level.

Internal Audit 3.0 is the next generation of Internal Audit, and is a function attuned to the challenges of emerging risks, technologies, innovation, and disruption as the organisation itself. Internal Audit must be a function fully able to assist in safeguarding processes and assets as management pursues new methods of creating and delivering value.

Based on Deloitte external quality assessments (EQAs) conducted for Internal Audit functions in a range of industries, in interviews with senior executives and audit committee chairs, and in numerous Deloitte research surveys with chief audit executives and heads of Internal Audit, the following constitute the triad of value that Internal Audit stakeholders now want and need.

• Assurance constitutes and remains the core role of Internal Audit. Yet the range of activities, issues, and risks to be assured should be far broader and more real-time than they have been in the past. Assurance on core processes and the truly greatest risks is essential but so is assurance around decision governance, the appropriateness of behaviors within the organisation, the effectiveness of the three lines of defense (LoD), and oversights of digital technologies. Assurance is central to Internal Audit’s role but must not be the limit.

• Advising management on control effectiveness, change initiatives, enhancements to risk management related to the three Lines of Defence and other matters – including business effectiveness and efficiency – falls well within Internal Audit’s role and stakeholders’ expectations. All sources confirm that a strong advisory role is key to maximising the value of Internal Audit.

• Anticipating risks and assisting the business in understanding risks, and in crafting preventative responses, transforms Internal Audit from being a predominantly backward-looking function that reports on what went wrong to a forward-looking function that prompts awareness of what could go wrong, and what to do about it, before it happens. Internal Audit becomes more proactive and, through its assurance and advisory roles, helps management intervene before risks materialise.

As the saying goes, “There are those who make things happen, those who watch things happen, and those who ask, ‘What happened?’” The stakes are too high, for both Internal Audit and the organisation, for Internal Audit to be in the latter group. Stakeholder needs have become clear enough for Internal Audit to engage in true transformation. With a vision – collaboratively developed, clearly articulated, and strongly supported – functions can upgrade to Internal Audit 3.0 providing stakeholders with its true worth. The future of Internal Audit has become clear, and the time to upgrade is now.

These key sources of opinion have clearly said that:
Assurance constitutes and remains the core role of
Internal Audit. Yet the range of activities, issues, and
risks to be assured should be far broader and more
real-time than they have been in the past. Assurance on
core processes and the truly greatest risks is essential
but so is assurance around decision governance, the
appropriateness of behaviors within the organization,
the effectiveness of the three lines of defense (LoD), and
oversight of digital technologies. Assurance is central to
Internal Audit’s role but must not be the limit.

Advising management on control effectiveness,
change initiatives, enhancements to risk management
related to the three LoD and other matters – including
business effectiveness and efficiency – falls well within
Internal Audit’s role and stakeholders’ expectations.
All sources confirm that a strong advisory role is key to
maximizing the value of Internal Audit.
Anticipating risks and assisting the business in
understanding risks, and in crafting preventative
responses, transforms Internal Audit from being a
predominantly backward-looking function that reports
on what went wrong to a forward-looking function
that prompts awareness of what could go wrong, and
what to do about it, before it happens. Internal Audit
becomes more proactive and, through its assurance and
advisory roles, helps management intervene before risks
materialize.

Internal Audit planning aims to balance assurance
around two features – core processes and the truly
greatest risks to the organization. Internal auditors can
cover only so many processes per year and often default
to performing audits on a rotational basis in order to
find time to also provide assurance around the greatest
risks. Yet stakeholders need both types of assurance
– assurance that core financial and operational
processes in areas like procurement, payables, payroll,
and health and safety are working properly, and
confidence that the organization’s truly greatest risks
(e.g. cyber, digitalization, change management, etc.) are
appropriately managed – on a more continual basis.
Now, what if – using digital assets – core assurance
could be automated, significantly reducing the
resources needed to cover these traditional, core
processes on a more continual basis? Automated
core assurance harnesses analytics, robotic process
automation (RPA), and artificial intelligence (AI) to
monitor controls and flag non-conformance in real
time. Combine this with automated reporting, and
Internal Audit can communicate non-conformance to
the business so they can remediate immediately, rather
than only being able to check the controls every few
years under a rotational audit plan scenario.

Assure
The core – but not the limit – of Internal Audit:

Advise
Maximizing value to stakeholders:

Anticipate
Delivering forward-looking insights:

Courtesy:

deloitte:gx-internal-audit-3.0-the-future-of-internal-audit-is-now

How to deal with Crisis Situation : Guidence to Students:

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Situations crop up regularly in most classrooms that threaten to distract from the lesson and derail learning for all. The following are a few suggestions for getting students back on track and keeping your cool when challenges arise.

• Cool off. Students take a moment and a breath when they feel their emotions getting the better of them.
• Speak to the other person directly. Students practice saying their peace firmly and kindly.
• Use active listening. Students listen attentively without interrupting and repeat what they heard back to the speaker, one at a time.
• Find a solution together.

Patience is a factor when implementing a classroom-wide compassionate conflict resolution, but you and everyone else in the class will reap the rewards of getting past the noise and feeling safe and respected when there’s a disagreement.

When students create a distraction, whether they’re speaking out of turn, resisting participating in class activities, or especially demanding attention, the impact is felt by everyone: the instructor (you) and the student’s fellow learners. Disruptive behavior happens and will always happen even in the most organized and communication-rich environments. The key is to navigate the upset so that you can keep the class, including you and the student in question, productive and on track.

Stock Splits

STOCK SPLIT

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What is a Stock Split?

All publicly traded companies have a certain number of shares outstanding that are issued and purchased by the investors. When a company’s board of directors decides to split its stock, it basically increases the number of shares outstanding by issuing additional shares to current shareholders. During stock split, the market capitalization of the company remains the same as number of shares are increased through proportional reduction in the par value per share. Stock split affects only the par value of share and the number of shares outstanding. A stock split is also known as a forward stock split.

Let’s consider the following example:

Effect of a 2-for-1 split	Before the Stock Split ($)	After the stock split ($)
1,000 equity shares of $100 each	100,000	—
2,000 equity shares of $50 each	—	100,000
Market Capitalization	100,000	100,000

The above example clearly illustrates that the accounting values in the market capitalization do not change as the market price per share is immediately adjusted to reflect a stock-split. In the table above, before the split, there were 1,000 equity shares of $100 each, resulting in equity capital of $100,000. After a 2-for-1 split, the number of shares will be 2,000 and the par value of share will be $50. Thus, the total equity value will remain the same, $100,000 (2,000 shares * $50 per share value).

What is a reverse stock split?

A reverse stock split is another version of stock split. It is a strategy through which companies eliminate shareholders that holds fewer than a certain number of shares of the total company’s outstanding stock, causing some shareholders holding less than the minimum required by the split cashed out. The procedure typically decreases the number of shares outstanding and increases the price per share. It is used by the companies to increase its stock price and gain more respectability in the market.

For example, company XYZ has 10,000,000 shares outstanding valued at $2.5 per share, resulting market capitalization being 25,000,000. The company reverse splits its shares 1-for-2 in an effort to reduce its share volatility. This decreases the outstanding shares from 10,000,000 to 5,000,000 and increases the value to $5.0 per share. The market capitalization remains the same as 25,000,000.

What is the significance of the stock splits for the Company?

The advantages of the stock split for the company are as follows:

• The forward stock splits enhance the liquidity in the market and make shares affordable for the retail investor. High liquidity improves the market efficiency of the stock with the low bid-ask spread.
• Forward stock splits help to increase the investor base and results in renewal of investor interest of the company.
• Forward stock splits allow companies to keep stock price in comfortable zone.
• There is no change in authorized and issued capital of the company.
• Reverse stock split results in increase in share price and help the company maintain minimum price per share required by the listing criteria of the global stock markets.
• The company can sideline penny stock traders through reverse stock splits as the price per share inflates.

What is the significance of the stock splits for the Investors?

The advantages of the stock split for the investors are as follows:

• Forward stock splits make shares more affordable to small investors, particularly when the prices of shares are very high.
• Forward stock split signals that the price per share of the company is increasing which is a good buying indicator.
• Investors (being shareholders) get more share because of stock split if bonus shares are issued by a company.
• No additional amount is required by the investor to acquire shares because of stock split.
• Stock splits are tax-neutral as there is no flow of money.

What are the disadvantages of the stock splits?

• Forward stock split makes the stock price more volatile. Generally, a stock with higher volatility is considered as a riskier investment.
• Stock splitting involve a lot of cost related to shareholder data update, notification letters and other listing exchange and legal requirements.
• Stock splits represent record-keeping issues for the company’s accountants, shareholders and analysts.
• Lower price of the stock may attract unwanted shareholders who may buy and sell shares a lot more frequently, causing larger fluctuations in the stock price.
• Stock split involves a risk of being delisted as it may cause dramatic fall in share price and increases the company’s risk of getting delisted.

BONUS SHARES

What are bonus shares?

Bonus shares are the free additional shares allotted to existing shareholders in the company based upon the number of shares the shareholder already holds. It is a manner by which a company rewards its current investors just like it does through dividends. The company pays bonus from accumulated earnings which are not given out as dividends.

In short, the reserve funds are converted into share capital, because of which company’s share capital increases while its reserve fund decreases.

Why the companies issue bonus shares?

The advantages of the bonus shares for the company are as follows:

• Bonus shares is an inexpensive mode of raising capital.
• It increases the confidence of the shareholders towards the company.
• Issue of bonus share infuse liquidity, as it leads to decrease in share price and make shares more affordable for retail investors.
• Issue of bonus shares represent capitalization of profits which help to increase the credit worthiness of the company.

What is the significance of the Bonus Shares for the Investors?

The advantages of the bonus shares for the investors are as follows:

• Bonus shares are free of cost.
• Bonus shares can be sold in the market immediately after issued to shareholders.
• Bonus shares are not taxable.
• Shareholders will get dividend on more shares than earlier in the future.
• Bonus improves the image of the company and its shares. Thereby, results in increase in the value of the share in the market.

What are the disadvantages of the bonus shares?

• The rate of dividend will decline sharply in future.
• If the rate of dividend fluctuates, it may result in the decline in the market value of shares.
• It will encourage speculative dealings in the company’s shares which is not desirable.

Conclusion

A stock split is the same share divided into two whereas bonus share is a free additional share. In both cases of stock splits and bonus shares, number of shares outstanding increases and the market valuation of all the shares held by the shareholders remain the same. However, bonus shares are only available to the existing shareholders whereas both existing as well as the potential investors can take advantage of a stock split.

Author: Swati J. – Analyst

Cambridge University moves all lectures online until summer 2021

By Ewan Somerville

www.gmsisuccess.com

The university said "given that it is likely that social distancing will continue to be required, the University has decided there will be no face-to-face lectures during the next academic year."

Tutors have been told that lectures will be held virtually, including live-streams. However, the institution still plans to hold seminars, work shops and small group-based learning in person with "strict social distancing" in force.

A Cambridge spokesman told LBC News: “The University is constantly adapting to changing advice as it emerges during this pandemic. Given that it is likely that social distancing will continue to be required, the University has decided there will be no face-to-face lectures during the next academic year.

"Lectures will continue to be made available online and it may be possible to host smaller teaching groups in person, as long as this conforms to social distancing requirements.

"This decision has been taken now to facilitate planning, but as ever, will be reviewed should there be changes to official advice on coronavirus.”

Alice Benton, the university's head of education services, told student news paper Varsity plans are currently being formulated to ensure the virtual lectures "will be of the best possible quality".

Cambridge is the first to take such a radical step, but the University of Manchester announced last week that it was conducting all lectures online during the autumn term.

The Russell Group institution took the move amid “real uncertainty” over when social distancing will end and said the lecture theatre "does not easily support spatial separation", but added it hopes to run some face-to-face learning for small groups.

It comes after the regulator told universities to inform applicants whether or not they could expect face-to-face teaching next year in advance of them accepting offers.

The Office for Students said bosses must give students “absolute clarity” and not offer false hopes of a “campus experience”.

Most campuses have been shut since April with classes and exams moved online.

There is growing uncertainty across the sector over how they will operate next year, with institutions already facing huge financial losses from an expected fall in overseas students studying in the UK this autumn.

It is likely to prompt questions over tuition fees, with home students paying £9,250 a year and international students paying up to three times that.

Michelle Donelan, the universities minister, has said institutions can charge the full fee as long as online learning is “quality”.

But some students have expressed concerns they won't be getting their money's worth if all the teaching is done online.

Alex Jones, a second year Cambridge natural sciences student, told LBC News: "Being in a contact-heavy course, there isn't really a substitute for teaching that we get in the lab.

"Already this term we've had half the number of contact hours we were originally scheduled to have, and 10 weeks of fieldwork we were due to have were cancelled.

"If the same thing happens next year it's hard to see how it's worth £9250 when we'll be getting a lot less teaching."

Other British universities, which have been closely watching Government guidance while hesitant to be the first to act, could now follow suit.

How to Become a Certified Financial Risk Manager (FRM®)

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• Financial Risk Managers (FRM) receive accredited by the Global Association of Risk Professionals (GARP).
• FRMs specialize in assessing risk for major banks, insurance companies, accounting firms, regulatory agencies, and asset management firms.
• FRM certification requires passing a two-part exam and completing two years of work experience in financial risk management.

An FRM identify threats to assets, earning capacity, or the success of an organization. FRMs may work in financial services, banking, loan origination, trading, or marketing. Many specialize in areas like credit or market risk. FRMs determine risk by analyzing financial markets and the global environment to predict changes or trends. It is the FRM’s role to develop strategies to counteract the effects of potential risks.

To receive the FRM designation, candidates must successfully complete a comprehensive, two-part exam and complete two years of work experience in financial risk management.

The exam is recognized in over 90 countries and is designed to measure a financial risk manager’s ability to manage risk in a global environment.

The FRM Exam covers the application of risk management tools and techniques to the investment management process. The questions are practical and related to real-world work experiences. Candidates are expected to understand risk management concepts and approaches as they would apply to a risk manager’s day-to-day activities.

The exam tests knowledge of the tools used to assess financial risks, such as quantitative analysis, fundamental risk management concepts, financial markets and products, and risk models. The FRM Exam Part I focuses on the essential tools and concepts required to assess financial risk. Passing the FRM Exam Part I is the first step for an individual to become a Certified FRM.

FRM Exam Format

The FRM Exam Part I and Part II are pencil-and-paper, multiple-choice exams. They are offered solely in English, twice a year in May and November, at over 100 exam sites around the world.

Body of Knowledge

Part I
A 100 question multiple-choice exam, the FRM Exam Part I focuses on the tools used to assess financial risk: quantitative analysis, foundations of risk management, financial markets and products, and valuation and risk models. Part I is always offered in the morning and must be completed in four hours or less.

Part II
The FRM Exam Part II is an 80 question multiple-choice exam, emphasizing the application of the tools acquired in Part I: market, credit, operational and integrated risk management, investment management as well as current market issues. Part II is always offered in the afternoon and must be completed in four hours or less.

Never leave an answer blank. A blank answer has a maximum point value of zero. A randomly marked answer has an expected value of 0.25 points, and if you can eliminate one bad answer, this value increases to 0.33 points. You will not be penalized for wrong answers.

FRM Exam Dates and Registration Periods

Examination Dates:

• May 16, 2020
• November: Date TBD

Final deadline exam registrations—May 2020:

• Early Registration – Ends January 31, 2020
• Standard Registration – Ends February 29, 2020
• Late Registration – Ends April 15, 2020

Final deadline exam registrations—November 2020:
* Registration Dates are TBD

FRM Progam Fees

Enrollment for the FRM exam requires a one-time enrollment fee of $400 (USD), due when you register for your first level I FRM exam, as well as individual exam registration fees.

• Early – $425
• Standard – $550
• Late – $725

Requirements to Earn the FRM

1. Register to Take the Exam
2. Pass FRM Exam Part I
3. Register for Part II
4. Pass FRM Exam Part II
5. Demonstrate two years of relevant work experience

Please note that if a candidate elects to take Part II on the same day as Part I, their Part II Exam will not be marked by GARP unless they first pass Part I

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