How an Internal Audit can help:
- Review transition plans against industry standards and leading practices while providing recommendations around potential risks and operational issues.
- Assist in identifying and documenting the risks and controls of new operating models.
- Assess how regulatory and compliance requirements apply to the evolved business model and develop ongoing monitoring process around these newly applicable requirements.
- Assist with the training and education of relevant individuals around the changes.
With industry trends showing a strain on gaming revenue, managing costs to maintain profitability is extremely important. For many lottery and gaming organizations, costs can increase unnecessarily due to vendors failing to meet contractual obligations. Third parties often work under highly complex contracts where the requirements are not clearly identified, key responsibilities may be overlooked, or contracts may not reflect changed circumstances. No matter the reasons, organizations need to manage the risks related to vendor relationships to maintain control over their costs.
How an Internal Audit can help:
- Review the process by which vendors are identified and establishing onboarding processes and controls for selected vendors.
- Conduct vendor audits that focus on compliance with contract terms and effectiveness of vendor internal controls.
- Assist in developing, implementing and calibrating a continuous monitoring system over vendors related to their self-reported data.
Use of Data Analytics and Continuous Monitoring in Internal Audit
Over the past few years, data analytics have helped revolutionize the way in which companies assess and monitor data, especially in terms of efficiently expanding the scope of audits and improving the detail levels to which audits can be performed. Data analytics and continuous monitoring can also help internal audit departments simplify and improve their audit process, resulting in a higher quality audits and tangible value for the business. In addition, leveraging data analytics also accommodates the growing risk-based focus on fraud detection and regulatory compliance.
How Internal Audit can help:
- Assist in creating automated extract, transform and load processes, along with system-generated analytics and dashboards monitored by the business against specified risk criteria.
- Assess the alignment of the strategic goals and objectives of the organization with risk management practices and monitoring, including the prioritization of strategic objectives and risks on a continuous basis.
- Enable data analytics audit programs designed to verify the underlying data analysis and reporting of risk at the business level.
- Automate auditing focused on root cause analysis and management’s responses to risks, including business anomalies and trigger events.
- Recommend the consistent use of analytics, including descriptive, diagnostic, predictive and prescriptive elements.
While the risks identified are particularly relevant, others continue to exist and internal audits can help manage those stemming from such areas as intellectual property protection, international operations, system implementations and upgrades, transitioning to the cloud, mergers, acquisitions, divestitures and revenue from contracts with customers.
There is little doubt that as lottery and gaming organizations take steps to adapt and innovate, their risk profile can also increase. The proper identification and mitigation of these risks is essential to effective business operations including reputation management, cost management and the protection of company data and assets.
Lesley Luk is Senior Manager, Technology, Media & Telecommunications (TMT), at KPMG in Canada. Contact KPMG in Canada’s Silvia Montefiore - (416) 228-7211 or Lesley Luk - (416) 228-7215 to learn more about internal audit opportunities and strategies for your organization. For more information, visit www.kpmg.ca.