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Introduction to Internal Auditing

Week 1

Discussion Points
What is Internal Auditing? What does an internal auditor do? Why consider the profession of internal auditing? Professionalism

Definition of Internal Auditing
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Bringing a systematic and disciplined approach to evaluating and improving the effectiveness of the organization’s: • risk management • control • governance processes. . .Internal Auditing . .theiia. .Traditional Roles Of An Internal Auditor Ensuring the Accuracy of Financial Records  Internal auditing was an extension of the accounting department  Tick and Tie Auditor  Counting Inventories  Verifying Petty Cash  Auditing Payroll Records  Audit by re-doing tasks www.

org .Transitional  Emergence of Operational Auditing  More focus on controls within the organization  Assumed a “Management Consultant” role Checked compliance with company policies and procedures  Evaluated the effective and efficient use of resources  Investigated fraud and other special events such as mergers.theiia.  Outsourcing and Co-sourcing www.

org .Current Roles  Serves the Entire Organization  Independent from Operating Management  Partners with Management  Participates with Improvement Teams & Task Force Processes  Uses Technology www.theiia.

pro-act and react to risk  We are organized globally and address the most important strategic issues. www.  We understand the organization’s culture as well as .  We can recognize.The IIA says as a Profession for the 21st Century  We know more about modern risk and control models than any other group.

org .theiia.Cornerstones for Corporate Governance www.

org .theiia.Internal auditors  Function as one of the cornerstones of good governance  Improve an organization’s operations…  Provide value-added services…  Help the organization accomplish its objectives…  Come from all disciplines… www.

org . and Procedures “Learn The Business”  Develop Understanding of Audit Techniques  Enhance Interpersonal Skills  Develop Written and Verbal Communication Skills  Enhance Computer Skills www. Policies.What Is It Like To Be An Internal Auditor?  Entry-level Responsibilities  Gain An Understanding of Organization Operations.theiia.

With More Experience Auditor-In-Charge Responsibilities:       Supervise Staff Manage Audits Train and Develop New Staff Develop Teamwork Solve Problems Build Rapport With Management .theiia.

With Even More Experience Management Responsibilities  Building Rapport With Senior Management and Audit Committee  Serving in an Advisory Capacity  Training and Advancing Staff Competencies  Developing Audit Plans and Budgets  Participating in Professional Organizations  Being a Valuable Resource for Improving the Organization .

org .theiia.Why be an internal auditor? Growing Profession Good Starting Salary Great Opportunities High Visibility www.

Erosion of Public Trust in Corporate Governance ® .

org .theiia.Impact on IA Time Magazine “persons of the year” 2002 www.

org .Impact on IA Re-engaging on Controls  Sarbanes-Oxley … is “all about controls”  Who knows controls better than … www.theiia.

org .theiia.The Profession of Internal Auditing  Allows for high-level understanding of the organization and industry  Exposure to senior-level management  Transferable skills/disciplines  Networking opportunities  Expanding Profession  Potential travel www.

the sky’s the limit.  Provide assurance services  Provide consulting services  Monitor and Evaluation the Organization’s Risk Management System  Recommend improvements and corrections  Work with Management  In a phrase: Add value to your organization.theiia. .What Can an Internal Auditor Really Do?  With all this information at your finger tips.

theiia.The Internal Auditor of Tomorrow Business Experience and Focus Expert in Risk Management Strong technology skills Strong understanding of the business Language skills Certification credentials .

org .Attributes Of A Successful Internal Auditor Objectivity Good Business Knowledge Good Negotiator Active Listener Creative.theiia. Problem Solver Confident Intuitive www. Inquisitive.

theiia.Characteristics of a Successful Internal Auditor Exceptional Communication Skills Reasoning Skills Technology skills Analytical skills People and Social skills Language skills Problem Solving skills .

Focus for Tomorrow’s Internal Auditor  Scope will expand further into governance and risk  Need to expand in areas of expertise and facilitation skills  Aggregator for assurance and consulting services  Assist the organization manage business risk .theiia.

theiia.Promoting The Profession The IIA through its motto Progress Through Sharing has established an effective network within the profession .

promoting best practice. www.The IIA Vision To be the global voice of the internal auditing profession: advocating its . and providing exceptional service to its members.theiia.

org .theiia.Strategic Objectives  Advocacy  Globalization  Service to Members www.

org .Advocacy Increased advocacy … to be recognized as the global voice for the internal audit profession www.theiia.

OSC. . CICA Developing position papers www. INTOSAI. AICPA. NACD. COSO.Advocacy  Fostering relationships with key stakeholder organizations  Monitoring and commenting on draft legislation around  Appearing before various boards and governing bodies Responding to regulators: SEC. GAO.theiia. PCAOB. FEI. ISO.

Advocacy Actions IIA Position Papers:  IA’s role in ERM  IA’s role in Sarbanes-Oxley  IA’s role in expressing an opinion on internal control .

Globalization Coordination with all IIA Affiliates Global capacity – developing countries Global committee structure Global products & services .

org .Globalization Furthering best practices in developing nations  Governance  Best practices  Quality auditing  Marketing the profession www.theiia. .Service to Members Knowledge resource on best practices  Resource for evolving professional development needs Technology guidance www.

org .Internal Auditing A Profession for the 21st.theiia. It is difficult to imagine a profession who’s members are not certified in it’s practice. Century? The world will not value a Profession that provides what the world needed yesterday. www.

Compliance Audit and Operational Audit. Define Internal Auditing 2. Internal Auditing Vs External Auditing? 4. Explain relationship between accounting & auditing 3. Define what is Financial .chapter 1) Internal Audit can assist top management in what way? www. According to Sawyer’s views (refer to text book.theiia. 5.Exercises 1.

Thank You .