Question

Review the engagement observation that follows and record the specific information that represents the recommendation and each of the following observation attributes: criteria, condition, cause and effect. Audit Observation and Recommendation: Corporation X associates are required to abide by the organization's formal Code of Business Conduct & Ethics (the Code). To ensure all employees are aware of the Code and their obligations under it, Corporation X requires all associates to acknowledge receipt of the Code. A global email was sent to all associates on July 1st informing them of their obligation to read and acknowledge the Code. Associates were instructed to complete and return acknowledgements by December 1st. Our audit testing indicated the following relative to the acknowledgement process: As of March 1st fewer than 50% of associates had completed and returned acknowledgments. Follow-up procedures have not been performed by human resources (HR) or department management to date. There is not a formal policy indicating actions to be taken if and when associates do not return acknowledgments. No disciplinary actions have been taken regarding associates who have not completed acknowledgments of the Code to date. Improving the acknowledgment process will help Corporation X demonstrate compliance with external regulations requiring a Code of Ethics. It will also help to ensure all associates are aware of their responsibilities and obligations to the organization under the Code. We recommend management enhance the acknowledgement tracking process to ensure all associates acknowledge receipt of, compliance with, and understanding of the Code. Policy and procedures need to be developed and implemented to take appropriate action when associates do not respond. Disciplinary action should be taken if associates refuse to complete and return acknowledgments, as required by policy. Management Response: Associates who have not acknowledged the Code as of March 24th will be sent a reminder notification the week of April 3rd informing them of the requirement to acknowledge the Code. A report of all associates who continue to be delinquent in acknowledging the Code will be provided to the applicable HR liaison for review and follow-up the week of April 17th. The HR function will partner with the department business heads of delinquent associates to obtain the necessary acknowledgments. A final report will be generated the week of April 24th to determine the remaining associates who have not acknowledged the Code. A verbal warning will be issued to all associates who have not acknowledged the Code by April 24th and a written warning will be provided to the associates who have not acknowledged the Code by April 30th. Accountability: Jane Doe Responsibility: John Smith Implementation Date: March 24 Write down the specific information in the engagement observation that represents the internal auditors’ recommendation and their observation attributes: criteria, condition, cause, and effect? Explain any reason that suggests that the observation, as presented, does not adequately address all the suggested observation attributes?

Answer 1

Engagement observations and recommendations emerge by a process of comparing criteria (the correct state) with the condition (the current state). Whether there is a difference or not, the internal auditor has a foundation on which to build the report. When conditions meet the criteria, communication of satisfactory performance may be appropriate.

Observation has right intention to implement the work and also the follow up process is also very systematic to meet the final goal of the organization's task of acknowledgement.

But the follow up process is too lengthy in terms of the time gap between the actions. As time-line is so lengthy, it will send the attitude of the management towards the acknowledgment of the employees about the code of ethics. Attitude of management is showing the lack of priority set by the management towards this. This communication will work if the time frame is reduced so that only message that communicate is top priority of the management for acknowledgement.

Observation has right intention to implement the work and also the follow up process is also very systematic to meet the final goal of the organization's task of acknowledgement.

But the follow up process is two lengthy in terms of the time gap between the actions. As time line is so lengthy as it will send the attitude of the management towards the acknowledgment of the employees about the code of ethics. Attitude of management is showing the lack of priority set by the management towards this. This communication will work if the time frame reduced so that only message that communicate is top priority of the management for acknowledgement.