Demonstrating The Value Of Internal Audit - Seminar Slides

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Demonstrating the value of internal audit

David McIntyre

Head of Business Risk Services (North)

December 2011


A value summary

• How is your value measured and by who?– Process– People / relationships– Outcomes and cost

• Raising the profile of IA

• Judging your effectiveness


Who measures you?

• Audit Committee

• Board of Directors

• Finance Director

• Business managers and staff

• Yourselves

• Regulators?


How you are measured?


Process

Common

• Scope clear and agreed

• % audit plan delivered• Timescales met• Attendance at meetings• Response to queries• Liaison with other

assurance sources

What else?

• Perception of depth of testing

• Perception of purpose of audit

• Level of interruption to day to day business activities

• Auditee involvement in audit planning


People / relationships

Common

• Friendliness of staff• Professionalism of staff• Constructive approach• Knowledgeable about

IA

What else?

• Profile in business / with senior management

• Consultant & business adviser?

• Knowledgeable about business

• Perceived interest in business

• Appearance• Past impressions /

recommendations


Outcomes

Common

• Number of recommendations

• Practicality of recommendations

• Relative assurance levels

What else?

• Innovative reporting techniques

• Cost savings / value of recommendations

• Contribution to key meetings

• Benchmarking• Clarity and extent of

assurance• Clarity and evidential

base of conclusions• No surprises


Case Study

• Was the business able to negotiate the dates of the audits? - Process

• Have the auditors responded quickly to correspondence and queries? - Process

• Did the auditors communicate to the audit committee and management:– The audit plan?– Terms of reference?– The audit approach?– The timetable of the audit? - Process

• Did the audits run on time? - Process


Case Study (Cont.)

• Were the findings fully discussed with management before reports were drafted? - Relationship

• Were the findings accurately drafted and agreed upon? - Relationship

• Were the recommendations considered constructive, relevant, practical and effective, taking proper account of the business context? - Outcomes

• Was management satisfied with the knowledge of the auditors? - Relationship

• Was there appropriate liaison with other assurance providers when relevant? - Process

• Were written reports clear, concise and delivered on time? - Process


Case Study (Cont.)

• Did the HoIA attend Audit Committee and deal with queries raised adequately? - Process

• Has there been a good relationship between the IA function, management and the Audit Committee? - Relationship

• Were ad-hoc queries adequately dealt with? - Process

• Did the auditors make practicable added value recommendations which if adopted would yield added net benefit equating to not less than 10% of the cost of the IA function? - Outcomes


Raising the profile of IA

• Consultation and engagement

• ‘Sell’ the approach

• Case studies / success stories

• Best practice communication


Judging your effectiveness

• International Standard 1312 ‘External Assessments’– Frequency– Type (external / validated self assessment)

• PKF’s approach to external assessments


Questions and Discussion

Contact: [email protected]

0161 819 3657

07767 248 967

mailto:[email protected]

Demonstrating The Value Of Internal Audit - Seminar Slides

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