TURNING INTERNAL AUDIT INTO THE DATA ANALYTICS EPICENTER FOR YOUR ORGANIZATION

Presenter: Heath Rude

Internal Audit Strategic Plan

•Satisfaction survey score •Audit requests•Outreach activities•Committee/task force•PwC reliance on IA

PARTNERINGOBJECTIVES MEASURES

•Provide the best customer service possible•Become a strategic business partner & trusted advisor

•Cost savings•Use of technology to enhance the audits•Best practices & process improvements identified

PIONEERINGOBJECTIVES MEASURES

•Add value & improve company operations•Embrace the use of new technology•Stimulate positive change

•Satisfaction survey•Training hours/auditor•Staff certifications•Industry experience•Audit experience•Audit staff turnover

PEOPLEOBJECTIVES MEASURES

•Develop skilled & motivated individuals into future company leaders•Be the employer of choice in the industry

PROCESSES

•Audit performance evaluation score•Audit plan completion %•Budget vs. actual costs•Report turnaround

OBJECTIVES MEASURES•Provide independent, objective assurance and consulting services in a systematic, disciplined approach

INTERNAL AUDITSTRATEGY

CORPORATESTRATEGY

• Leadership

• Professionalism

• Passion

• Happiness

• Vision

• Innovation

• Change

• Proactivity

• Independence & Objectivity

• Integrity

• Efficiency & Effectiveness

•Professional Skepticism

• Trust

• Teamwork

• Unity

• Synergy

ADVISORY

ASSURANCE

Values

Values

Valu

esValues

Focus on the BONE!Improve your organization through data analytics!

■ Take the Lead■ Tactics■ Obstacles■ Real Examples

Become Sought-After

.

The Case for Internal Audit (IA) Taking The Lead

Assurance

Diversity

Exposure

Data Analytics

Assurance Skillset Advisory

• Process Re-Engineering• Facilitators• Data Analytics

“That is not the role of IA.”

Internal auditing is an independent appraisal activity established

within an organization as a service to the organization.-IIA Definition of IA in 1978

Internal auditing is an independent, objective assurance and

consulting activity designed to add value and improve an

organization’s operations.- IIA Definition of IA from 1999 to today

Internal Audit credibility and value are enhanced when auditors are

proactive and their evaluations offer new insights and consider

future impact.- 2016 Proposed Addition, Standard 2100

Aligns with the strategies, objectives, and risks of the organization.

Demonstrates quality and continuous improvement.

Communicates effectively.

Is insightful, proactive, and future-focused.

Promotes organizational improvement.

Advisory services is an essential function of IA.

Tactic 1: Integration

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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

New York State Violent Crime Rate per 100,000 Population

Source: FBI, Uniform Crime Reports

For Daily Fantasy-Sports Operators, the Curse of too much Skill

In the first half of the 2015 MLB season, 91% of daily fantasy sports

player profits were won by just 1.3% of players-Article by Ed Miller and Dan Singer, Sports Business Daily

How Companies Learn Your Secrets

My daughter got this in the mail!” he said. “She’s still in high school,

and you’re sending her coupons for baby clothes and cribs? Are you

trying to encourage her to get pregnant?”-Article by Charles Duhigg, New York Times

Tactic 2: Timing is Everything

RED FLAG RULESAre customers who they say they are?

■ Huge data set in multiple tables■ Defined rules of applicability■ The system handles it■ Company expert

Customer RatesWere customers accurately billed?

■ Several regulated tariffs■ Monthly weather adjustor■ Team to program and test■ Over 100 pages of scripting

“They should not have access to that.”

IA needs access to data to do their job.

Tactic 3: Market Yourself

Everything you wanted to know about audit, but were too afraid to ask!

Planning

Fieldwork

Reporting

Follow Up

The Audit Process

2nd Line: Monitoring

1st Line: Performing

3rd Line: Auditing

Risks

The Three Lines of Defense

Revenue ProtectionHas someone stolen gas?

■ Three lines of defense■ Validate reports or triggers■ Improve the process

Rate Change ReportWere changes properly entered into the system?

■ Many types of changes■ Over 2,200 pages■ 100% comparison■ Temporary fix

Purchasing Card CommitteeWhat card is best for our Company?

■ Spending habits■ Vendor contract■ Authorization levels and spending limits■ System configurations■ Dealing with outliers

Tactic 4: Win When You Fail

Fuel PurchasesAre fuel purchases legit and within policy?

■ Good procedures■ Poor reports■ No enforcement■ Bad data

Tactic 5: Support Other Data Analytic Groups

“We cannot ask them for help because they must maintain their independence.”

IA can provide assistance while ensuring safeguards are in place while maintaining independence.

Pipe RecallWhat pipe needs to be replaced and when?

■ Trouble getting data■ System change■ Lay out assumptions■ Prioritized by operational unit

“We’re hesitant to ask for help from them because it may be used against us.”

IA is a trusted advisor and a valuable partner.

Remember the BONE!Improve your organization through data analytics!

Build your strategy:

■ Integration■ Timing is Everything■ Market Yourself■ Win When You Fail■ Support Other Data Analytic Groups

Become Sought-After

THANK YOUCONTACT ME AT HEATH.RUDE@SWGAS.COM