Exercise –

Challenges and Gaps

Center for Internal Audit Services Philippines (CIASP)

Objective
• The purpose of this exercise is for the participants to
make an initial assessment on the challenges and
gaps commonly faced by Internal Audit Department
as well as those encountered by operating
Management.
• The participants will discuss ways to address these
challenges and gaps both from a short-term and
long-term perspective.

2
Instructions
• Refer to the presentation materials and the references
• Discuss within your group (per EC).

Time allotted: 25 minutes

Output: Presentation of Results and Action Plans/
Recommendations

3
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Purpose, Examples:
Authority and • No audit charter
Responsibility • IA function not yet structured
• No clear understanding on the
role of internal audit
• Risk management not yet in
place
• Others (please specify)

4
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Independence Examples:
and objectivity • Internal Audit is under the
Office of General Manager thus
independence is affected
• Doing pre-audit work
• Handling operational
transactions
• Other departments are relying
on data from Internal Audit
instead of producing their own
reliable data that IA can validate
• Others (pls specify)

5
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Relationship Examples:
with senior • Internal Audit is not involved in
management strategic planning.
and Board • Internal Audit is not aware of
some of the policies formulated
by the Board.
• Audit findings/reports are
difficult to ‘sell’
• The management does not
take the necessary action on
the IA recommendations.

6
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Relationship Examples:
with senior • The results of audit may affect
management the relationship with the
and Board Board and top Management
and thus may have adverse
consequences on the part of
the internal auditor.
• The different cultures in
different ECs, including the
political interventions, have
impact on the effectiveness of
the Board and its relationship
with the auditors.

7
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Relationship Examples:
with senior • The board does not have a big
management stake since they have no material
and Board capital contribution or exposure.
• There is lack of effective
transparency and accountability.
• Board and management need to
be made aware of IA Standards

8
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Fostering an Examples:
ethical climate • Violation of policies or
irregularities are not dealt with
in an appropriate manner
• Violations on the
implementation of NEA
memos
• Others (pls specify)

9
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Risk based plan Examples:
• Still doing traditional
approach
• Inadequacy of the risk based
audit plan
• Difficulty in implementing
due to no ERM or IA focus is
distracted as it has to lead the
ERM initiative
• Others (pls specify)

10
Exercise – Challenges and Gaps – Internal Audit
Ways to Address Them
Area Challenges and Gaps
Manpower Examples:
resources • High turnover of
employees
• Lack of skills /
competencies or training
• Doing too much clerical
work
• Others (pls specify)

11
Exercise – Challenges and Gaps – Internal Audit
Ways to Address
Area Challenges and Gaps Them
Others Examples:
• Non-existing or outdated policies
or procedures or IA manual
• No coordination with external
auditor
• No quality assurance program yet
• Lack of understanding on the
distinction of the role of Internal
Audit vis-a-vis NEA- ECAD
• Conflict in interpretation of laws,
regulations and issuances
• Others (pls. specify)

12