Solution 3.1c Agency Risk Identification Matrix

Seminar-Workshop on Integrated Results and Risk-Based Audit Phase 2 – Agency Audit Planning and Risk
Assessment
Agency Risk Identification Matrix
AGENCY RISK IDENTIFICATION MATRIX
Agency : Housing Development Authority Prepared by : Date :

:
Audit Period CY 2011 Reviewed by Date
: :
:
Office Approved by Date
: :
Risk Risk Rating Risk Location

Agency Risk Title/ Initial Audit
Ref. Overall Rating
Risk Statement Impact Likelihood Processes/PAPs Office Response
No.
Public Service FINANCIAL
and Operations- HIGH HIGH HIGH Investments Investment
Department COMPLIANCE
X Customer/public MODERATE MODERATE MODERATE
01 PERFORMANCE
Satisfaction: LOW LOW LOW
FRA
JUSTIFICATION JUSTIFICATION
B. Function:
1. The 70% Management is
Investing Failure to attain the
investible funds complying with the
70% investible funds
to housing may limitations imposed
may threaten the
not be attained by the Charter.
agency’s capacity to
due to
meet or exceed the
investments in
customer’s/ public’s
bonds and other
expectations.
marketable
securities.
“The information provided for this practice set is intentionally created for the IRRBA workshop purposes. All transactions are fictitious and do not represent any real life scenario.”
1|Page
Assessment
Risk Agency Risk Title/ Risk Rating Risk Location Initial Audit
Ref. Risk Statement Impact Likelihood Overall Rating Processes/PAPs Office Response
No. Strategic- FINANCIAL
HIGH HIGH Investments Investment
S6 Resource COMPLIANCE
Department
Allocation: XMODERATE HIGH MODERATE
PERFORMANCE
LOW MODERATE LOW
B. Function: 2. Inappropriatene
FRA
JUSTIFICATION LOW
Investing ss of resource
The Authority lacks
allocation JUSTIFICATION
focus on the
process Management is
customer/ public
prohibits the complying with the
which threatens the
agency’s ability limitations imposed
agency’s capacity to
to provide value by the Charter.
meet or exceed the
for public.
customer’s/ public’s
expectations.
Strategic FINANCIAL
HIGH HIGH HIGH Restructuring Loans Recovery
S12 Major initiatives COMPLIANCE
Group
XMODERATE MODERATE MODERATE
-Planning and LOW LOW LOW
PERFORMANCE
FRA
Execution
Laws are enacted
3. The policy on Only a few imposing a moratorium
B. Function:
restructuring defaulting borrowers on foreclosure of past
Restructuring may not would avail due accounts which
consider the themselves of the allows borrowers to
restructure their
capacity to pay restructuring accounts without
of the defaulting program, thus past consideration of their
borrower/s. due accounts would capacity to pay.
2|Page
Assessment
No. increase.
Strategic FINANCIAL
HIGH HIGH HIGH
S12 Major Initiatives – COMPLIANCE
MODERATE MODERATE MODERATE
Planning & PERFORMANCE
Execution LOW LOW LOW Housing Loan FRA
JUSTIFICATION JUSTIFICATION Department
B. Processes: 4. Housing units
Inefficient and/or Recent news that
Housing financed by the
ineffective several individuals
Program HDA may not be
implementation of complained of
properly
the housing receiving notices
awarded to
program. and billing
intended
statements when
beneficiaries
they did not file any
due to:  Developer-
application for
a. absence or housing loans Assisted
lack of proper neither do they Housing Loan
planning and have any (Window A)
appropriate knowledge on the
guidelines in transaction.
the production
and award of
housing units
to intended
beneficiaries;
3|Page
Assessment
No. b. Housing
loans may be
granted to
fictitious and
those with no
capacity to pay;
 End-user
c. Loan Financing
collaterals may Program
not be properly (Window B)
appraised and
may not be
sufficient to
cover the loans
in case of
default.
4|Page
Assessment
No.
Operations Developer- FINANCIAL
HIGH HIGH Housing Loan
O5 Public Service assisted Dept COMPLIANCE
Operations – MODERATE MODERATE Housing Loan PERFORMANCE
Efficiency LOW LOW (Window A)
FRA
 Increase in past-
B. Processes: Failure to conform Previous audit
due accounts of
to established findings and recent
Housing defaulting
internal procedures news development.
Program- borrowers that
Developer or regulations on may affect the HIGH
Assisted “buy-back” liquidity of the MODERATE
(Window A) – guarantee for loans Authority.
LOW
that defaulted
 Increase in
Collection within the
acquired assets
Servicing seasoning period of
that cannot be
Agreement two years may
easily disposed.
result to non-
issuance of notice  Delay of
of “buy-back” within investment
the prescribed recovery that
period of 15 may affect the
calendar days from liquidity of the
date of default. Authority.
5|Page
Assessment
No.
Strategic FINANCIAL
HIGH HIGH Developer- Housing Loan
S10 Planning and COMPLIANCE
assisted Dept.
X Resource allocation
MODERATE MODERATE
Housing Loan PERFORMANCE
- Outsourcing LOW LOW (Window A) FRA
JUSTIFICATION
HIGH
 Inability to obtain
B. Processes: Outsourcing MODERATE
the optimal level
Housing activities to third LOW
of payment
Program- parties may result
received from JUSTIFICATION
Collection in developers not
housing loan
Servicing acting within the Previous audit
beneficiaries
Agreement intended limits of findings and recent
(borrowers).
their authority or news development.
not performing in a  Low receivable
manner consistent turn-over.
with the agency’s
strategies and
objectives.
Financial Developer- FINANCIAL
F9 HIGH HIGH HIGH Housing Loan
Liquidity and Credit assisted Dept. COMPLIANCE
X – Credit and
MODERATE MODERATE MODERATE Housing Loan PERFORMANCE
Collections LOW LOW LOW (Window A, B)
B. Processes: FRA
Housing JUSTIFICATION JUSTIFICATION

Program-  Inability to obtain Previous audit
Collection The unreasonable the optimal level findings.
6|Page
Assessment
No. delay in the receipt of payment
of collections from received from
borrowers, housing loan
Developers, Banks beneficiaries
and other (borrowers).
institutions
authorized as
collecting agents on
housing loans.
Operations FINANCIAL
HIGH HIGH HIGH
O10 People – COMPLIANCE
Recruitment and PERFORMANCE
Retention LOW LOW LOW
FRA
 Delays in the Based on the
D. Management: profile of the Hiring of Human
The absence of an processing of
outsourced contractual Resource Dept.
Manpower appropriate policy housing loans
Complement personnel, they employees
on recruitment may especially those
result to insufficient that are based on possess the
number of skilled percentage of qualifications for
and qualified completion. the job.
employees to man  Delivery of sub-
critical positions standard housing
such as those units by
performing developers and
appraisal/inspection approval of
7|Page
Assessment
No. of developer’s housing loans
projects, acquired resulting in high
assets, collateral incidence of
for foreclosure, and defaulting
progress accounts
construction of
housing units.
Strategic FINANCIAL
HIGH HIGH HIGH
Planning and COMPLIANCE
S10 Resource allocation PERFORMANCE
– Outsourcing LOW LOW LOW
JUSTIFICATION JUSTIFICATION FRA
Outsourcing
Management:
activities to third Inefficient delivery of Close supervision Hiring of Human
Manpower parties may result services or risk of over contractual contractual Resource Dept
Complement in the third parties asset employees and employees
not acting within the misappropriation monitoring of their
intended limits of when contractual performance.
their authority or employees fail to do
not performing in a things they should
manner consistent do.
with the objectives
and strategies of
the HAD.
8|Page
Assessment
No.
Operations FINANCIAL
HIGH HIGH
08 Public Service & COMPLIANCE
MODERATE MODERATE
Operations- PERFORMANCE
LOW LOW
Partnering JUSTIFICATION JUSTIFICATION FRA
E. .Objectives
and The private sector Previous audit
d. The HDA may
Strategies partners may fail to finding that Developer-
fail to choose HIGH
perform their functions delegated Assisted Housing Loan
M. PAPs the right private MODERATE
obligations resulting to accredited Housing Loan Department
sector partner.
in non-attainment of developers such as LOW (Window A)
objectives of the processing,
housing program. evaluation and
approval of housing
loan application
resulted in
fraudulent loan take
outs.
Membership Provident Office
F7 Financial FINANCIAL
HIGH HIGH HIGH Contribution
Liquidity and Collection COMPLIANCE
Credit-Funding PERFORMANCE
LOW LOW LOW
FRA
E.
Objectives
and The HDA may fail Low membership Prior year’s data
9|Page
Assessment
No. to raise appropriate collection will reduce showed only 9%
Strategies
funds to finance the funds available variance between
housing programs. for lending actual and target on
purposes. funds generation.
Developer- Housing Loan

C10 Compliance- FINANCIAL
HIGH HIGH HIGH Assisted Department
Code of conduct: Housing Loan COMPLIANCE
Third Party Fraud (Window A) PERFORMANCE
LOW LOW LOW
F.
The risk that the
Stake-  Previous audit
fraudulent activities
Holders- Loss of government finding that
perpetrated by
Developers funds. functions
agents or third-
delegated to
party administrators
K. Recent accredited
against the agency
Development/ developers such
for personal gain
News as processing,
(e.g.
evaluation and
misappropriation of
approval of
physical, financial
housing loan
or information
application
assets) expose the
resulted in
agency to financial
fraudulent loan
loss.
take outs.
10 | P a g e
Assessment
No.  Complaints
received from
individuals who
received
statement of
accounts on
approved
housing loans
but did not have
any knowledge.
C7 Compliance- FINANCIAL
HIGH HIGH HIGH
Mandate: COMPLIANCE
Reputation LOW LOW LOW
PERFORMANCE
F. FRA
Damage to the JUSTIFICATION JUSTIFICATION
Stake- Agency’s reputation Developer-
Holders exposes it to loss of Loss of government Complaints Assisted Housing Loan
public trust. funds. received from Housing Loan Department
K. Recent individuals who (Window A)
Development/ received statement
News of accounts on
approved housing
loans but did not
have any
knowledge.
11 | P a g e
Assessment
No.
FINANCIAL
HIGH HIGH
Compliance: COMPLIANCE
MODERATE MODERATE
C2 Governance- PERFORMANCE
LOW LOW
Board JUSTIFICATION JUSTIFICATION FRA
performance/Agenc
y management
committee The Board of Existence of a HIGH
G. The Board may Trustees provides search committee MODERATE
adopt policy the policy directions, who provides the
Key LOW
guidelines absence of which President with the
Environmenta
impacts the short list of qualified
l Factors
not aligned with the attainment of the proposed
Political HDA mandate due agency’s objectives. appointees to the
to political Board.
patronage.
Compliance: FINANCIAL
HIGH HIGH HIGH
C15 Legal-Legal COMPLIANCE
PERFORMANCE
LOW LOW LOW
G. Changing laws may Policies and Contracts entered

Key threaten HDA ‘s operations adversely into by HDA always
12 | P a g e
Assessment
No. capacity to affected by changing include a Contract
Environmenta
consummate laws and separability clause Preparation Legal Dept.
l Factors
important regulations. that provisions not
Legal & transactions, in conflict with
Regulatory enforce contractual subsequent laws
agreements or and regulations is
implement specific valid and effective
strategies and between parties.
activities.
O17 Operations: FINANCIAL

HIGH HIGH HIGH
Information & COMPLIANCE
Technology- PERFORMANCE
LOW LOW LOW
Security/Access JUSTIFICATION JUSTIFICATION FRA
G.
Integrity Financial
Key Accounting
Environmenta The current IT Unreliable financial HDA is capable to Reporting
Department
l Factors infrastructure may and non-financial install systems that
not adequately reports affect the would support its
Technological ensure integrity and decisions of present IT
confidentiality of management. infrastructure.
data and
information as
Access Risk and
Fraud Risk remain
13 | P a g e
Assessment
No. high especially in
the
Branches/Regional
Offices where the
Systems
Administrator as a
super-user has
access to all
databases and
passwords.
HIGH HIGH HIGH
C11 Code of conduct- COMPLIANCE
Illegal Acts PERFORMANCE
LOW LOW LOW
H. Key Illegal acts JUSTIFICATION JUSTIFICATION FRA
Performance committed by
Indicators senior Loss of government Integrity of the Recruitment
management, Human
funds. officers and Process Resource
division heads or employees senior
employees may Division
management hold
expose the agency itself to the highest
to fines, sanctions standards and lead Human
and loss of public Human
by example. Resource Devt. Resource Devt.
trust, profits and
reputation and the
like.
14 | P a g e
Assessment
No.
Financial: FINANCIAL
HIGH HIGH HIGH
F11 Accounting, COMPLIANCE
reporting, and PERFORMANCE
disclosure LOW LOW LOW
I. Existing JUSTIFICATION JUSTIFICATION FRA
Accounting Incomplete,
inaccurate and/or Financial Accounting
Policy Unreliable financial Reporting Department
untimely reporting and non-financial
of required financial reports affecting the
and operating decisions of
information to other management.
regulatory agencies
may expose the
agency to fines,
penalties and
sanctions.
Over-emphasis on
financial accounting
and other
information to
manage the
operations may
result in the
manipulation of
15 | P a g e
Assessment
No. outcomes to
achieve targets at
the expense of not
meeting public
expectation, quality
and efficiency
objectives.
Developer- Housing Loan
HIGH HIGH HIGH Assisted Dept
C18 Legal Housing Loan COMPLIANCE
Terms and (Window A): PERFORMANCE
LOW LOW LOW Accreditation
J. Previous conditions of the JUSTIFICATION JUSTIFICATION FRA
Audit Memorandum of
Findings Agreement entered Loss of government Previous audit
by HDA with the funds. finding that
developers may be functions delegated
unfavorable to HDA to accredited
and they may fail to developers such as
comply with and processing,
monitor contract evaluation and
terms to protect the approval of housing
HDA from financial loan application
losses. resulted in
fraudulent loan take
outs.
16 | P a g e
Assessment
No.
Financial- FINANCIAL
HIGH HIGH HIGH
Market: COMPLIANCE
F9 Credit and PERFORMANCE
LOW LOW LOW
Collections JUSTIFICATION JUSTIFICATION FRA
Collections of Collections not

accredited received on time 245.26% increase
J. Analytical
Review developers may fail may impact the in Accounts Developer-
the HDA to obtain liquidity of the HDA. Receivable as a Assisted Housing Loan
Financial the optimal level of result of the Housing Loan Department
collections. reclassification from (Window A)
Sales Contracts
Receivable to
Accounts
Receivable-
Developers due to
breach of
warranties or
default.
17 | P a g e

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Seminar-Workshop on Integrated Results and Risk-Based Audit Phase 2 – Agency Audit Planning and Risk

Agency Risk Identification Matrix

AGENCY RISK IDENTIFICATION MATRIX

Agency : Housing Development Authority Prepared by : Date :

Risk Risk Rating Risk Location

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Housing JUSTIFICATION JUSTIFICATION

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Developer- Housing Loan

Agency Risk Identification Matrix

Agency Risk Identification Matrix

G. Changing laws may Policies and Contracts entered

Agency Risk Identification Matrix

O17 Operations: FINANCIAL

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Agency Risk Identification Matrix

Collections of Collections not

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