Our second day seminar, organized by Center for Global Best Practices, were my good friend Mr. Henry Aquende is the Founder and Chairman.
Our Lecturer and Presentation was made by an exemplary, energetic, brilliant yet ” down to earth”, and practical talent. Mr. Juancho B. Robles, Risk Management Partner and Advisory Services Division Head, Punongbayan & Araullo, he is a CPA, CFE, CISA, CRMA, FICD, MM.
I was just amazed with his stamina, wisdom,knowledge and lively discussions from 9:00 am to 5:00pm.. Surely, one can see Mr. Robles loves his work and practices what he preaches..
The first topic for day two, July 4, 2013 was on ” Risk Management Tools for the Audit Committee”. The general contents of the presentation were;
A) The Risk Management Process
B) Risk Management Activities
C) Key Risk Areas of the Audit Committee
Mr. Robles started his lecture by giving us some day-to -day , practical situations were Risk Management is needed. He proved the point by asking direct questions , like What to do in certain difficult situations, What can we do to control it, How to cope and Accept the Risk, without too much damage to the corporation, and its shareholders.
That is why a Risk Plan is an indispensable element for the Board of Directors to map out a strategic risk management framework, including Operations, Compliance, and looking into the Internal Environment, Control Activities, Information Technology and Communication Monitoring.
How can the Audit Committee Oversee the Company’s Risk Management Process? It can oversee the Company’s Risk Management Process by knowing the RM process. To be aware of risk appetite, and inquire who is responsible. The Audit Committee’s Role is to discuss with management the processes, so as understand the internal audit’s role. Moreover, to review business risks (with a focus on financial reporting risks) and discuss with management, policies on controls. In these way, the audit committee will be in place to ensure that the members receive or are furnished with the information needed.
The Audit Committee must have an Action Plan regarding compliance with laws and regulations, Fraud Detection. The Action Plan can be summarized as follows:
- ensure procedures are in place for the receipt, retention, and treatment of complaints.
- establish criteria for immediate reporting of certain complaints.
- review the company/s programs for ensuring compliance with laws and regulations
- receive and review summary reports of violations and company policies.
It is suggested and of good practice that the committee action plans would include Orientation, Training, and Continues Professional Education.
In summary the four points to consider in a Risk Management plan are to;
For example, accidents do happen, or a disaster of some sort, so, with a specific Action Plan, Management, with the guidance of the Audit Committee will know how, when, and where to take action.
The Board shall provide oversight in coordination with the top management’s activities in credit issues and concerns, market, liquidity, operational, legal and other risks of the corporation.
However, in consideration of the risk profile of the corporation , the Board shall constitute a Risk Management Committee that will focus in carrying out the oversight role for the Audit Committee.
Therefore, Mr. Robles, presented his summary of advantages in Risk Management for Audit Committees as follows:
A) Supports strategic and business planning
B) Reassures the Stakeholders
C) Supports effective use of resources
D) Promotes continues improvement
E) Help Focus Internal Audit and Program
F) Identify Opportunities
G) Fewer shocks and unwelcome surprises
We learned to identify each type of Risk, depending on the Corporation’s activities and line of business. It is good to be familiar with one’s specific Industry. Risks may vary from Macro or Global levels to the Micro, local environment.
The key Risk areas of the Audit Committee are; Management Oversight, Internal Audits, External Audits, Internal Controls, Financial Statements, Compliance with Regulators, Trainings, and Meetings.
Management Oversight on the other hand, must address Risks Conflicts with Management, Relationships, and other Issues or Concerns.
In the afternoon session we tackled Assessing and Appraising the Audit Committee’s Effectiveness.The contents of the presentation was all about:
- Audit Committee’s Performance Assessment
- Individual Member’s Performance Assessment
- Best Practices
The objective is to assess using a method of frequency. In this way the Audit Committee will improve its effectiveness. The purpose is to identify areas for improvements (policies, structure, and members), and help in coming up with a plan, to achieve desired outcomes.
Instead of the participants getting sleepy from heavy meals and cold rainy weather, we were all kept awake and participated in a workshop on How to Deal with Extraordinary Events.
It was a hands-on case study where the participants formed groups to present their Risk Management Plan.
Sample case study exercise:
Sample Risk Management Checklist:Risk Management Checklist
Lecturer and presentor Juan Carlos “Juancho” B. Robles, CPA, CIA, CFE, CISA is a top risk management expert who has helped large companies as well as SMEs successfully implement ERM strategies in their organization. Juancho currently holds 3 positions at Punongbayan and Araullo as partner of risk management, partner of specialist advisory services division and chairman of its audit committee.
He has gained over 20 years of combined experience in public accounting, government auditing, internal audit, forensic audit, risk management, and business consulting. He is a Certified Public Accountant, both in the United States and in the Philippines. He is also a Certified Internal Auditor and a Certified Fraud Examiner. He obtained his Master’s Degree in Management, with Distinction, from the Asian Institute of Management.