In today’s interconnected world, multinational organizations must remember that one country’s way of performing audits is not the ONLY way. Internal audit teams, with members outside of the U.S., are challenged to report results to multiple regulators and process data in and from multiple countries. Discover the steps the Nasdaq audit team takes to manage this harnessing the power of technology and effectively applying data analytics to their audit process. KEY LEARNING OBJECTIVES: 1. Maximizing analytics to gather data, ensure evidence is available and satisfy regulators 2. Learn a process that ensures regional and local regulatory requirements are addressed for international engagements 3. Develop an audit plan for multi-country board reporting 4. Overcome cultural differences to make sure the audit message is consistent across the whole organization

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Challenges of Auditing
in a Multinational
Corporation
Lenny Block
VP Internal Audit
Nasdaq Inc.
About Jim Kaplan, CIA, CFE
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Presenter
Lenny Block
VP Internal Audit,
Nasdaq
A Little About Me
• VP of Internal Audit, responsible for the U.S. Business Audit Team
• My team performs internal audits to help ensure regulatory
compliance, operational effectiveness and financial reporting
integrity for Nasdaq entities
• Responsible for Internal Audit’s Data Analytics (CaseWare IDEA)
and Continuous Monitoring
• Prior to Nasdaq: Senior level positions with technology consulting
organizations providing program leadership, system analysis and
business process expertise
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A Little About Me
• CPA, CIA, Bachelor of Accounting, Masters of Information Systems
Technology
• Adjunct Faculty – Southern New Hampshire University
• Ocean Isle Beach, NC via Washington, DC
• Husband, father and avid sports fan (Ice Hockey, Golf, Tennis,
Pickleball)
Nasdaq: More Than a Stock Exchange
• Multiple exchanges and clearing houses, domestic and international
o Nasdaq, Boston, Philadelphia, Stockholm, Helsinki, Copenhagen, Iceland
• Listing venue for publicly traded companies
o Multiple asset classes (equities, options, commodities)
• Global Information Services
o Global Data Products
o Index Products
• Market Technology
o Trading and Data Solutions to Exchanges, alternative-trading venues, banks
and securities brokers
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Nasdaq: Internal Audit
• 22 Auditors - New York, Maryland, Philadelphia, Stockholm, Vilnius
• Through acquisitions and relocations, Nasdaq is a
multinational group
Are We Tolerant of
Other Cultures ?
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Does This Happen at Your Organization?
Does This Happen at Your Organization?
• Are we true partners
with our audit
co-workers in different
cultures?
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Have We TRULY LISTENED
to the Challenges our
Co-Workers Face Within Their
Country?
Internal Audit Teams Outside the U.S.
Challenges Audit Teams Outside the U.S. Face:
• Report results to multiple regulators
• Process data in and from multiple countries
• Nasdaq has regulators – the SEC, CFTC, DOJ, etc.
• What regulations do non-U.S. Internal Auditors face?
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Internal Audit Teams Outside the U.S.
Regulations Non-U.S. Internal Audit Teams Face:
• Compliance Plans and Reports submitted to the Nordic and Baltic
Regulators
• Compliance Plans and Compliance Reports submitted to the Nordic
Boards
• Report to Estonian FSA on a special review
• Finnish FSA approval process of new regulations
• Report received by the Danish FSA on their current reviews
• Norwegian FSA reviews
• Latvian FSA reviews
Internal Audit Teams Outside the U.S.
Regulations Non-U.S. Internal Audit Teams also Face:
• MiFID II – Regulatory reporting Compliance
• Member On-boarding (Nordic and Baltic regulators)
• Regulatory requirements for on-boarding and recurring reviews
against EU and local legislation
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External Challenges and Events
• Regulatory Uncertainty and Heightened Scrutiny – Creates risk
• Sanctions – Compliance has become more complex because
- Sanctions have been increasingly used to advance national interests
- Sanctions programs are more complex
- Greater conflicts between US and European sanctions programs
• U.S. Foreign Corrupt Practices Act/UK Bribery Act – Anti-corruption
compliance is a top white-collar law enforcement priority
• Cyber Security – A top priority for regulators and the source of new
compliance requirements
• Data Privacy – Compliance to European General Data Protection
External Challenges and Events
• MiFID II – Regulation that increases transparency across EU financial
markets and standardizes the regulatory disclosures for particular
markets
• Brexit – Continued uncertainty creates risk
• Members relocating from the UK to EU27 countries
• Employees and tax law changes
• Contracts rely on UK law or involve processing personal data in the UK
• Cloud Computing – Increased regulator scrutiny and related
requirements
• Nordic Governance Structure and Alignment – Keep current for
regulated entities
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Internal Challenges Within the Organization
• Regulatory rule books widely vary among countries
• Foreign Currency Translation
• IFRS vs. GAAP
• Different external audit teams in multiple countries (i.e. SOX)
• Holidays and vacations
• Local regulatory restrictions on bank accounts
• Legal entities and intercompany transactions
• Welcome to Sweden…
Internal Challenges Within Internal Audit
• Language
• Verbal and written
• Cultural tendencies
• Challenging a superior is not common practice
• Audit skepticism is important
• Holidays and vacations (Again !!)
• Scheduling meetings / Time differences
• Work life balance
• Competition for talent
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Internal Challenges Within the Organization
• Think about what we have to
overcome
What are You Doing to Address Challenges?
• Why hockey?
• More on that later…
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Are We Tolerant of
Other Cultures ?
Nasdaq Areas of Focus…
• Evidence is available to satisfy regulators
• Multi-Country Board Reporting
• Delivering a consistent audit message across the organization
• Developing a universal language – Everyone understands
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Evidence is Available to Satisfy Regulators
• Each regulator wants to see coverage for their country
o Can create administrative nightmares dealing with varied combinations
Meeting the Challenge:
• Sampling Considerations
o Thresholds vs. Risk Levels; Patterns vs Transactions
• One scope, multiple reports
o Ratings by Legal Entity – Regulators want to see ratings for their countries
o Issues and by Legal Entity
Multi-Country Board Reporting
Regulated Legal entities have their board packages
• U.S. and non-U.S. board reporting want different things
o For example: We don’t include some financial audits for U.S. regulators
but European regulators often want them
• Hard to keep current with an audit plan that is dynamic
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Multi-Country Board Reporting
Meeting the Challenge:
• Start with Risk Assessment and the Yearly Audit Plan
• Legal Entity Tagging
• Cannot compile board packages effectively, if you try to do on the fly!
• Templates are the necessity
• Legal Entities and the associated “CC” list for scope memos and reports
• Quality Control of Audit reports, Scope memo and Board Packages
• Do not underestimate the time and resources this takes
Multi-Country Board Reporting
Sounds simple, but can become quite complicated
Business EVP SVP VP Head of Business BU CFO LE LE CEO
Area 1 EVP1
SVP1 BUCFO1
SVP2
SVP3
VP 1 Nasdaq Nordic Ltd LE CEO1
Nasdaq Stockholm AB LE CEO2
Nasdaq Helsinki Ltd. LE CEO3
Nasdaq Copenhagen AS LE CEO4
VP2 Nasdaq Clearing AB LE CEO5
VP3
Nasdaq Oslo ASA LE CEO6
VP4 SE Nasdaq Vilnius LE CEO7
Vilnius Services UAB (NAVS) LE CEO8
Nasdaq Riga AS LE CEO9
Nasdaq Tallinn AS LE CEO10
SE NCSD LE CEO11
Nasdaq Iceland hf LE CEO12
Nasdaq Iceland CSD hf LE CEO13
VP5 Nasdaq Broker Services AB LE CEO14
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Delivering a Consistent Audit Message
English is a Second Language (or third or fourth) to Many
• The skills international team mates have may be taken for granted
• Internal Audit deliverables are in English
• Report Writing – Difficult to prepare consistent reports because
writing styles differ so much
Delivering a Consistent Audit Message
Meeting the Challenge:
• Joint Risk Assessments – Teams don’t sit in on only auditees from their
countries
• Form international teams for the projects
• Staff Meetings (Weekly and Monthly)
• Yearly Off-Site Meeting
• Standards and Templates
• Training conducted by same instructor for U.S. and Non-U.S. auditors
o Everyone hears the same message
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Delivering a Consistent Audit Message
• Partake in the each audit teams’
culture (Glogg and Bun Day)
• Have auditors work in other
countries
o Build relationships with their
teammates
o Better understand the
cultural differences between
the other country’s auditees
Developing a Universal Language
Everyone Understands
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The Game
TJ Oshie - US Alex Ovechkin - Russia Nick Backstrom - Sweden
Delivering a Consistent Audit Message
Communication Through Data
• A successful audit is tied to
understanding the business
Case Study: Cash Collateral Payment
Processing
• Collaborated with Sweden
• Colleague understood the business
• I had some understanding of the business,
but extensive knowledge of data analytics
• TOGETHER, with IDEA as our common tool,
we became better while achieving audit objectives
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Internal Audit - Data Analytics – Universal Language
Win – Win
• Now I understand the business
• My colleague reinforced and strengthened her knowledge of
data analytics as a powerful audit tool
• Data analytics is a great vehicle for multinational audit teams
Other Multi-Country Efforts Using Data Analytics
• Fraud Assessments
• Collections
• Payroll
• Teams included auditors from Sweden, U.S. and Lithuania
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Let’s Put This Into Action
Key Takeaways:
• Team up auditors from different international locations
o Find a project you can execute together using data analytics
• Partake in the other audit teams’ culture
• Joint Risk Meetings – teams should not sit on only auditees from
their countries
• Sampling Considerations:
o Thresholds versus Risk Levels
o Patterns versus transactions
o Remember regulators care about their countries
• Templates Board Reporting packages (They will make your life easier)
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Multinational Internal Audit Teams Must Remember
• Be tolerant
• Understand challenges Internal Audit teams face outside the U.S.
o Remember all those regulators they have to deal with?
• Your way of performing audits is not the ONLY way
Multinational Internal Audit Teams Must Remember
We need each other and work better together!
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Thank you!
Questions?
Contact Us:
connect@caseware.com
www.idea.caseware.com
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