Elevating IA
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The document outlines an ideal process framework for an internal audit function to elevate its value. The framework consists of 5 phases: 1. Strategic management - Developing strategic and annual audit plans based on past audit reports, risks, and other assurance information. 2. Quarterly assessment - Analyzing audit performance and adjusting the audit plan accordingly based on targets, identified risks, and areas for improvement. 3. Forecast synopsis - Establishing whether key year-end targets will be met using a forecast model and trend analysis. 4. Risk identification - Identifying risks that could impede targets and determining the appropriate audit approach like adequacy, effectiveness, or compliance audits. 5
Elevating IA
- 1. Wayne Poggenpoel 6 March 2015 ELEVATING THE VALUE OF INTERNAL AUDIT
- 2. Some facts Internal audit aspirations: highlighting the primary purpose and goal of the function Outcomes/results of a value based internal audit activity Designing an ideal model for a forward looking internal audit shop Capitalising on a process framework that can elevate the status of internal audit CONTENTS 2
- 3. Some Facts 2015 Global Audit Committee Survey - KPMG: Top five Challenges and Concerns 1. Uncertainty and volatility (economic, regulatory, political) 2. Government regulation & impact 3. Legal/regulatory compliance 4. Operational risk/control environment 5. Talent management & development 2015 South Africa Risk Report - IRMSA: Top five Risks by Likelihood 1. Corruption 2. Unemployment 3. Critical infrastructure 4. Political and social instability 5. Organised crime Top five Risks by Consequence 1. Corruption 2. Governance failure 3. Unemployment 4. IT infrastructure and networks 5. Critical Infrastructure The IIAs Audit Executive Center Global Pulse of the Profession survey, 2014.: Top five topics that need to be better addressed according to Management & Audit Committees in order of priority 1. Risk management processes 2. Information technology and data management 3. Operational risks 4. Compliance and regulation 5. Corruption/fraud 3
- 4. Internal Audit Aspirations Internal Audit Mission Statement Greater Stakeholder Expectation Definition IA IA Evolving To enhance and protect organizational value by providing stakeholders with risk-based, objective and reliable assurance, advice and insight4
- 5. Outcomes/Results Reliable assurance that organization is operating as intended past information Reliable assurance that risks are mitigated future - risk sources/causes Insights improving controls, processes, procedures, performance and risk management benchmarking performance and best practice internal audit developments Display objectivity and independence WHAT SHOULD YOU EXPECT Proactive and Positive Change 5
- 6. Outcomes/Results cont Help focus on strong controls, accurate reporting, effective oversight, mitigation of risks Assist in identifying of risks Provide insight on effectiveness of controls, compliance with policy and procedure and recommend improvements Catalyst for improvement - evaluate processes, report findings and recommend action Provide insight into process improvement by analysing data & information Assess efficiency and effectiveness of operations by understanding business and operations Accountable in helping management achieve objectives Continue to have integrity and be independent when performing our duties 6
- 7. INTERNAL AUDIT FUNCTION MARKETING component IA OPERATIONS Aligned to Organization RESEARCH component Ideal Model 7
- 8. Process Framework Strategic Management Purpose ---- Planning Quarterly Assessment Purpose ---- Adjust planning accordingly Forecast Synopsis Purpose ---- Establish whether key year end targets will be met Risk Identification Purpose ---- Identification of risks, sources and appropriate audit approach Audit Management Purpose ---- Recommend practical solutions to influence action FORWARD LOOKING IA FUNCTION Facilitate achievement of objectives 8
- 9. Strategic Management Past Information: audit reports risk assessments performance information other assurance information Strategic Plan Annual Plan KPIs identify obstacles what went wrong what went right process problems people problems technology problems Adequate Alignment PURPOSE OF EXISTENCE Audit Plans: Three year and Annual plans Adequacy audits Effectiveness audits Economy audits Compliance audits Risk audits Process audits Annual plans could change quarterly Adequate Alignment insights analysis Consulting projects to consider: Control Self Assessments Control and risk assessment training Benchmarking Fraud awareness Data analysis provide insights Phase 1 9
- 10. Quarterly Assessment Perform Analysis Provide Insights & Analysis Adjust Audit Plan Accordingly Adjust audit plan for next quarter Based: -under/over achievement of targets -identify sources of risk -additional risks identified -areas for improvement -short, valuable, insightful audits Phase 2 10
- 11. Forecast Synopsis Purpose: To establish whether key year-end targets will be met Outputs: Year end forecast model A planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past, present and analysis of trends. Providing insight, hindsight and foresight Phase 3 11
- 12. Risk Identification Purpose: To identify risks and its sources that impedes the achievement of year end targets Categorize risks according to: People Process Technology External Identify appropriate way of auditing sources/causes of risks Adequacy audit Effectiveness audit Compliance audit Economy audit Phase 4 12
- 13. 13 Audit Management Phase 5 Outputs: Practical recommendations that influences management to take action Purpose: To assess and evaluate the risks, its root causes/sources, impact & recommend an action plan
- 14. 14 IF WE ALWAYS DO WHAT WE ALWAYS DID WE ALWAYS GET WHAT WE ALWAYS GOT Quote by Henry Ford
- 15. 15 Questions