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How JCPenney is Managing Corporate Risk

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Presentation on theme: "How JCPenney is Managing Corporate Risk"— Presentation transcript:

1 How JCPenney is Managing Corporate Risk

2 John Polarinakis, Audit Director Dave Miller, Senior Audit Manager

3 What is JCPenney doing? Ethics Program Internal Audit Function
Anti-Fraud Programs Enterprise-Wide Hotline

4 On-line Ethics Statement
A letter from our Chairman The purpose of the Statement of Business Ethics Our responsibility as an employee A great work environment Our duty to the Company

5 An Effective Ethics Program
Communication with Employees Communications with Suppliers Employee Training The Use of Criminal Background Checks The Role of the Legal and Ethics Compliance Committee Measuring our Performance – how effective are the programs

6 How does Internal Audit support the Company’s corporate governance initiatives?

7 Perform an Annual Risk Assessment
Risk rank each audit area Discuss with management Allocate resources Allow for flexibility

8 Fashion Triangle for Internal Auditing

9 Anti-Fraud Programs Fraud Risk Assessment Fraud Awareness Program
Continuous Auditing and Monitoring Enterprise-Wide Hotline

10 Objectives of Fraud Risk Assessment
Evaluated the adequacy of select controls to mitigate fraud risks Reviewed the oversight processes to prevent and detect fraudulent activity Identified additional anti-fraud control enhancements

11 Benefits of Fraud Risk Assessment
Interaction with management Increasing management’s fraud awareness

12 Business Process Owner Fraud Schemes/Scenarios
Fraud Risk Matrix Business Process Owner Fraud Schemes/Scenarios Controls Monitoring Stores Theft of merchandise Store access is secured and alarmed when not receiving merchandise or during “off” hours. Hotline established for use by employees to report theft issues. Written procedures related to physical security, shoplifting, and internal employee theft. The following areas monitor these activities: Store, District and Regional Management Store, District, Regional and Home Office Loss Prevention Internal Auditing

13 Increasing Fraud Awareness
Established multi-department task force to oversee Conducting awareness and ethics presentations Red Flags of Fraud poster Senior Management presentations to Audit Committee

14 Continuous Auditing Continuous Monitoring

15 Monitoring Retail Store Operations
Short cash expense Bad check expense Purchase card expense POS information

16 Anti-Fraud Continuous Auditing
Matching vendor and employee name, address and telephone number Identifying duplicate vendor invoices Identifying duplicate expenses – travel

17 Establishing an Enterprise-Wide Hotline
Required as part of SOX 301 and 806 Means of anonymous communication for employees and vendors Establishing Awareness programs No Retaliation Policy communication

18 Benefits of Outsourced Program
Online database of all call activity Automatic notification of call activity Available 24/7 Multi-lingual service Experienced operators Call monitoring

19 Steps to Take Communicate what is expected of employees
Provide a safe mechanism to report concerns Zero Tolerance for fraud

20 Questions?

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