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Topic 1 Foundation of IA
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Transcript of Topic 1 Foundation of IA
8/2/2019 Topic 1 Foundation of IA
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Introduction to InternalAuditing
Week 1
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Discussion Points
What is Internal Auditing?
What does an internal auditor do?
Why consider the profession of internal auditing?
Professionalism
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Definition of Internal Auditing
Internal auditing is an independent,objective assurance and consulting activitydesigned to add value and improve anorganization’s operations.
It helps an organization accomplish itsobjectives by bringing a systematic,disciplined approach to evaluate and
improve the effectiveness of riskmanagement, control, and governanceprocesses.
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Bringing a systematic and disciplined approach to
evaluating and improving the effectiveness of the
organization’s:
• risk management
• control
• governance processes.
Internal Auditing . . .
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Traditional Roles Of An
Internal AuditorEnsuring 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
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Transitional
Emergence of Operational Auditing More focus on controls within the organization
Assumed a “Management Consultant” role
Checked compliance with companypolicies and procedures Evaluated the effective and efficient use of
resources
Investigated fraud and other special eventssuch as mergers.
Outsourcing and Co-sourcing
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Current RolesServes the Entire Organization
Independent from OperatingManagement
Partners with Management
Participates with ImprovementTeams & Task Force Processes
Uses Technology
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The IIA says as a
Profession for the 21st
CenturyWe know more about modern risk and
control models than any other group.
We understand the organization’s cultureas well as management.
We can recognize, pro-act and react torisk
We are organized globally and addressthe most important strategic issues.
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Cornerstones for
Corporate Governance
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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…
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What Is It Like To BeAn Internal Auditor?
Entry-level Responsibilities
Gain An Understanding of OrganizationOperations, Policies, and Procedures
“Learn The Business”
Develop Understanding of Audit Techniques
Enhance Interpersonal Skills
Develop Written and VerbalCommunication Skills
Enhance Computer Skills
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With More Experience
Supervise Staff
Manage Audits Train and Develop New Staff
Develop Teamwork
Solve Problems Build Rapport With Management
Auditor-In-Charge Responsibilities:
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With Even More Experience
Building Rapport With Senior Managementand 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 theOrganization
Management Responsibilities
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Why be an internal auditor?
Growing Profession
Good Starting Salary
Great Opportunities
High Visibility
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Erosion of Public Trust in
Corporate Governance
®
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Impact on IA
Time Magazine
“persons of
the year”
2002
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Impact on IA
Re-engaging on Controls
Sarbanes-Oxley … is “all about controls”
Who knows controls betterthan …
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The Profession of Internal
AuditingAllows for high-level understanding of
the organization and industry
Exposure to senior-level management
Transferable skills/disciplines
Networking opportunities
Expanding Profession
Potential travel
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What Can an Internal Auditor
Really Do?With all this information at your finger tips,
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.
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The Internal Auditor of
TomorrowBusiness Experience and Focus
Expert in Risk Management
Strong technology skills
Strong understanding of thebusiness
Language skills
Certification credentials
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Attributes Of A Successful
Internal AuditorObjectivity
Good Business Knowledge
Good NegotiatorActive Listener
Creative, Inquisitive, Problem
SolverConfident
Intuitive
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Characteristics of a
Successful Internal AuditorExceptional Communication Skills
Reasoning Skills
Technology skillsAnalytical skills
People and Social skills
Language skillsProblem Solving skills
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Focus for Tomorrow’sInternal Auditor
Scope will expand further into governanceand risk
Need to expand in areas of expertise andfacilitation skills
Aggregator for assurance and consultingservices
Assist the organization manage businessrisk
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Promoting The Profession
The IIA through its motto ProgressThrough Sharing has established
an effective network within theprofession
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The IIA Vision
To be the global voice of theinternal auditing profession:
advocating its value, promotingbest practice, and providing exceptional service to its
members.
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Strategic Objectives
Advocacy Globalization Service to Members
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Advocacy
Increased advocacy
… to be recognized as the
global voice for the internal
audit profession
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Advocacy
Fostering relationships with keystakeholder organizations Monitoring and commenting on draftlegislation around
Appearing before various boards andgoverning bodiesResponding to regulators: SEC, PCAOB,INTOSAI, GAO, AICPA, ISO, IFAC, OSC,NACD, FEI, COSO, CICADeveloping position papers
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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
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Globalization
Coordination with all IIA AffiliatesGlobal capacity – developing countriesGlobal committee structureGlobal products & services
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Globalization
Furthering best practices indeveloping nationsGovernance Best practices
Quality auditing
Marketing the profession
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Service to Members
Knowledge resource on best practices Resource for evolving professional
development needsTechnology guidance
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Internal AuditingA Profession for the 21st.
Century?
The world will not value a
Profession that provides what theworld needed yesterday.
It is difficult to imagine a
profession who’s members are notcertified in it’s practice.
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Exercises
1. Define Internal Auditing2. Explain relationship between accounting & auditing
3. Internal Auditing Vs External Auditing?
4. Define what is Financial Audit, ComplianceAudit and Operational Audit.
5. According to Sawyer’s views (refer to textbook- chapter 1) Internal Audit can assist
top management in what way?