Part 1

Internal Auditing
Practices…
Parallelisms & Peculiarities

A Compilation Shared by:

JUNN E. NICANOR
IIA-Phils.
 Internal
Audit
Practices

Parallelisms & Peculiarities

PUBLIC PRIVATE
1 Internal Auditing Defined…..
Public Private
- the evaluation of management - an independent objective assurance
controls and operations performance, and consulting activity designed to add
and the determination of the degree of value and improve an organization’s
compliance with laws, regulations, operations.
managerial policies, accountability
measures, ethical standards and - helps an organization accomplish its
contractual obligations. objectives by bringing a systematic,
disciplined approach to evaluate and
- involves the appraisal of the plan of improve the effectiveness of risk
organization and all the coordinated management, control and governance
methods and measures, in order to processes.
recommend courses of action on
matters relating to operations and
management control.

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
2 IA Scope of Work…..
Public Private

Operations
and
Management
Controls

Control Design
and
Implementation

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
3 IA Standards based on…..
Public Private
• Philippine Government • International Professional
Internal Audit Manual Practices Framework
(PGIAM): (IPPF) with 4 mandated
components:
- IA Definition - Core Principles
- Scope of Work - IA Definition
- Types of Audit - Code of Ethics
- Principles and Standards - International Standards for the
Professional Practice of Internal
with Hierarchy of Applicability
Auditing (ISPPIA)

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
 License to Operate…..
4 Public Private
• Legal Basis: • Internal Audit Charter
- PD 1445 (Government Auditing Code of the - Approved by the AuditCom
Phils.) dtd. 11 June 1978
- EO 292 (Administrative Code of 1987 dtd. 25
- Ratified by the BOD
July 1987 - Specifies the Purpose, Authority,
- AO 119 dtd. 29 March 1989 Responsibility, Scope, Declaration
- MO 277 dtd. 17 January 1990 of Independence, Full Access to
- AO 278 dtd. 28 April 1992 Company Records among others.
“Directing and Strengthening of the Internal Control
Systems of Government Offices, Agencies, GOCCs,
including Government Financial Institutions and Local
Government Units, in Their Operations”.
- AO 70 dtd. 14 April 2003
“Strengthening of the Internal Control Systems of
Government Offices, Agencies, GOCCs, including
Government Financial Institutions and Local Government
Units” reiterated the authority for the creation of the
IAS/IAU and its functions..’
PGIAM complements the National Guidelines on
Internal Control Systems (NGICS) issued pursuant to
DBM Circular Letter No. 2008-8 dtd. 23 October 2008.
As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
5 IA Code of Conduct and Ethics…..
Public Private

• Code of Conduct and Ethical • Code of Ethics for Internal

Standards for Public Auditors as mandated by IIA
Officials and Employees

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
6 Internal Control Framework…..
Public Private
• PGIAM Internal Control • COSO Integrated Internal
Framework Control Framework

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
7 Internal Audit Process…..
Public Private
• PLANNING • PLANNING
• EXECUTION • FIELDWORK
• REPORTING • REPORTING
• FOLLOW-UP • MONITORING PROGRESS

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
 Types of Audits…..
8 Public Private
• Compliance Audits • Compliance Audits
• Management Audits • Integrated Management
• Operations Audits System Audits (QEHSMS)
• Operations Audits
• Financial Audits
• IT/Information Systems Audits
• Governance Audits
• Asset Management System
Audit
• Information Security
Management System Audit

(FIXED PER PGIAM) (RISK-BASED)

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
9 Reporting Lines…..
Public Private
• Department Secretary (DS)/ Publicly-Listed:
Head of Agency (HoA) • Board Audit Committee with
• Governing Body (GB)/ 2-3 Independent Directors
AuditCom of and to be chaired by an
– Government Owned and Independent Director
Controlled Corporations (Functionally)
(GOCC’s)
– Government Financial
• President / CEO or COO
Institutions (GFI’s) (Administratively)
– Local Government Units
(LGU’s) Private Corporations:
• Audit Committee
(Mature/Big companies)
• Senior Management
(Small companies)
As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
10 Independence…..
Public Private

• Not part of the process being • Not part of the Process being
reviewed reviewed

• Rigid Independence • Independent Business

Partner

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.
 Audit Observations and
11
Recommendations are based on:
Public Private
4 C’s: 4 Attributes:

• Criteria • Criteria
• Condition • Condition
• Conclusion • Cause
• Cause • Effect

As defined by the Department of Budget and Management in the Philippine As defined by The Institute of Internal Auditors, International in the
Government Internal Audit Manual (PGIAM) for IA’s in the public sector. International Professional Practices Framework (IPPF) for internal auditors.