2 October 2006 Implementing an Effective Internal Audit Function Greg Hollyman - 1

(Add your Business Unit name here)

Implementing Implementing an Effective an Effective

Internal Audit Internal Audit FunctionFunction

Monday, 2 October 2006Monday, 2 October 2006

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Discussion AreasDiscussion Areas• The starting point• Elements of a transformation strategy

• Vision, Mission and Structure• Internal Audit Charter• Human Resource Issues• Project management and Methodologies• Marketing the function

• The way forward• Conclusion

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The Starting PointThe Starting Point

• City restructure – 6 Local Councils into 1• Different methodologies• Lack of formalised training programmes• Less than 50% with tertiary education – no CIA’s• Limited to no use of technology• Not relied upon by Office of the Auditor General• Perception of “bloodhounds” focusing on petty issues• Within 18 months became the first internal audit function in

the country to receive a Quality Assurance Review by the Institute of Internal Auditors (IIA) and only the third local government in the world to receive one and obtained the highest rating

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The Transformation StrategyThe Transformation Strategy

• Develop a new, relevant vision, mission and structure• Obtain approval of the internal audit charter• Address the human resources issues• Examine the project management and methodologies• Market the function

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Vision, Mission and StructureVision, Mission and Structure

• Vision is shorter term and once achieved a new vision should be established

• Mission is how you operate – A starting point is the definition of internal auditing as defined by IIA

• Structure is dependent upon your circumstances, but should be as flat as possible and be risk-focused

• Formalise them and market them

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Internal Audit CharterInternal Audit Charter

• Not a nice to have!• Formalise it, get it approved by Audit Committee and

publicise it• Make sure it covers Risk Management, Governance and

Control• If involved in the recommendations for Audit Committee

members ensure you get the right people – ignore AG rates

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Human Resource IssuesHuman Resource Issues

• Become members of the IIA• Implement and sign the IIA Code of Ethics• Implement a formal training and development plan but know

your starting point (skills assessment)• Give study assistance and push the right qualifications (CIA &

CISA)• Implement a performance management system

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Human Resource Issues (cont.)Human Resource Issues (cont.)

• Involve the staff in designing the future e.g. focus groups addressing various areas

• Team-building exercises• Focus on communication e.g. staff meetings, electronic

newsletters, etc.• Go the extra mile in obtaining benefits for the staff• Embrace team philosophies

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Project management & methodologiesProject management & methodologies

• Methodology must be risk focused• Tailor the right methodology to your environment• Ensure quality control mechanisms are built in• Schedule your jobs and ensure an adequate time

management system (i.e. time sheets) is in place• Get the right tools, e.g. computers, relevant software

packages, etc.• Have external quality reviews performed as endorsed by IIA

in the Standards

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What should be in your Internal Audit Manual?What should be in your Internal Audit Manual?

• Contents must be in line with the IIA Standards• Vision, Mission and Charter• Roles and responsibilities of the team• Methodology + work pack templates• Standards and Code of Ethics• Strategic Plans• Performance Management System• Training Calendars• Any other relevant Internal Audit policies

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Market the functionMarket the function

• Identify your targets• Market your function both internally and externally• Investigate the development of marketing brochures to be

rolled out with a marketing road show• Most effective marketing is the deliverance of a professional

service

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The Way ForwardThe Way Forward

• Join and use the IIA• Know where the division needs to change and how – have a

proper transformation strategy• First get the basics right, e.g. methodologies, abide by the

Standards for the Professional Practice of Internal Auditing, etc.• Abide by the Code of Ethics • Motivate, empower and look after the team - they can make or

break a division• Check if everything is on track – i.e. a QAR• Package and market the division

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ConclusionConclusion

Desire is the key to motivation, but it's the determination and commitment to an unrelenting pursuit of your goal- a commitment to excellence-

that will enable you to attain the success you seek."

~~Mario Andretti~~

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THANKTHANKYOUYOU