Caroline MawhoodExternal Member of the Audit Progress Committee

The role of the audit committees in bringing added value to Internal Audit

IAS Conference 2014 - Adding value through Internal Audit

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Experience as External Member

• Corporation of London: local authority• Department of Energy and Climate

Change: government department• Nuclear Decommissioning Authority:

independent authority• Debt Management Office: UK Agency• Audit Progress Committee

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1. The Role of Audit Committees• Why?• Who?• What?• When ?

2. The Added Value of Audit Committees• Generally• To Internal Audit

The role of Audit Committees in providing added value

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Why have an Audit Committee?

To: Provide assurance on an organisation’s financial management, control and risk

•Improve accountability

•Provide focus on governance, risk management and good financial controls

•Provide specialist consideration of audit matters

•Bring independence and scrutiny to Internal and External Audit Work

APC Purpose: Similar but emphasis on Internal Audit and controls in Directorate Generals

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Who is involved in Audit Committees?

All have non-executive/external members but structures are different

•UK Government Departments: 3 to 4 external members with one as the chair who sits on main Board

•Corporation of London: 7 elected members, one of whom is Chair and all sit on main Council plus 2 external members

•Audit Progress Committee: 7 Commissioners plus 2 external members

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What does the Audit Committee do?

• Approve the Internal Audit Plan

• Approve the Internal Audit Budget and Resource Plan

• Receive reports on progress from Chief Internal Auditor including performance measures

• Approve decisions on appointment of Chief Internal Audit Executive

• Review and advise on Internal Audit reports

• Review the key risks and risk assessment process

• Approve external audit plan

• Review external audit findings

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Performance Measures for Internal Audit: Examples

% of Audit Plan completed: Target 90%% of Recommendations fully implemented: Target 75%Timely Production of Draft Report: Target 80%Timely agreement and issue of Draft Reports: Target 80%Customer Satisfaction: Target 90%% of Audit Staff with professional qualification: Target 75%

Plus: Peer Review and Benchmarking

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• 7 Commissioners and chaired by one of the Commissioners

• 2 external members with financial management and audit expertise

• Scrutinise and endorse the Internal Audit Plan

• Review the content, validity and clarity of Internal Audit reports

• Follow up implementation of recommendations

Summary of Audit Progress Committee

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When do Audit Committees work?

For committees there is variation

Debt Management Office – 4 times a year quarterly

Department of Energy and Climate Change and Corporation of London: 6 times a year and 2 close together for accounts review

Audit Progress Committee:

-4 Main Meetings a year

-2-3 Preparatory meetings per main meeting

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What is the added value of Audit Committees?

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• Oversee its independence

• Support effectiveness of the Internal Audit Process

• Promote effective use of internal audit in the assurance framework

• Provide forum for open debate and mature questioning

• Demonstrate its standing in the organisation

What is the added value of Audit Committees for Internal Audit?

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cipfa.org

To ensure that

•Internal Audit has the necessary support in the Commission

•Auditee takes the audit findings seriously

•Auditee provides appropriate action plan

•Auditee follows up recommendations

•The Committee provides an important link with the Commission itself

What is the added value of APC for Internal Audit?

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