The Professional Practice of Internal Auditing

1. The Professional Practice of Internal Auditing Presenter Name Title School

2. The Professional Practice of Internal Auditing Institute of Internal Auditors defines internal auditing as: “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.  It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”

3. The Professional Practice of Internal Auditing “Internal auditing is an independent, objective assurance and consulting activity...”

4. Independence in fact and in appearance. Organizational independence. Personal independence. Objectivity refers to an auditor’s ability to perform engagements without subordinating his or her judgment on matters, or compromising. Commonly accepted best practice: Internal Audit should report functionally to the Board of Governors, or its Audit Committee, and administratively to the CFO, CEO or equivalent.

5. The Professional Practice of Internal Auditing Assurance “An objective examination of evidence for the purpose of providing an independent assessment…Examples include financial, performance, compliance, system security, and due diligence engagements.” Consulting “Advisory and related client service activities, the nature and scope of which are agreed to with the client, are intended to add value…Examples include counsel, advice, facilitation and training.”

6. The Professional Practice of Internal Auditing “…designed to add value and improve an organization's operations. It helps an organization accomplish its objectives…”

7. 2010 Global Internal Audit Survey: A Component of the Common Body of Knowledge (CBOK) Study “The major focus areas for internal auditing in the next five years will be corporate governance, enterprise risk management, strategic reviews, ethics audits and migration to International Financial Reporting Standards (IFRS). Auditors will place less emphasis on operational and compliance audits, auditing of financial risks, fraud investigations, and evaluation of internal controls.”

8. What does our school need to excel at in order to be successful?(insert picture)

9. The Big Picture Strategic Reviews • Example project 1 • Example project 2 • Example project 3

10. The Big Picture Compliance • Example project 1 • Example project 2 • Example project 3

11. The Big Picture Operational • Example project 1 • Example project 2 • Example project 3 Insert picture

12. The Professional Practice of Internal Auditing “…by bringing a systematic, disciplined approach to evaluate and improve the effectiveness…”

13. Code of Ethics Standards Position Papers Practice Advisories Practice Guides International Professional Practice Framework

14. Our School Internal Audit Terms of Reference (Charter) • Role • Independence and Authority • Access to Information • Scope of Work • Professional Standards • Conduct of Work • Coordination of Information

15. The Professional Practice of Internal Auditing “…of risk management, control, and governance processes.”

16. The Big Picture Risk Management • Assess how risks are identified and evaluated • Assess the reporting of key risks • Do not set risk appetite • Do not choose risk responses Governance • Assess the control environment • Review the Board’s evaluation and monitoring activities • Provide assurance on existing risk and control frameworks

17. Risk Management ~ University Context Management must… Identify, Measure, and Respond …to risks affecting institutional objectives. Internal Audit must… Evaluate the ways in which management does those things, offer recommendations where appropriate and report to the Audit Committee on risk management activities.

18. Internal Audit Role in ERM

19. Internal Controls and Governance Management must ensure that internal controls… • Operate effectively and efficiently • Safeguard assets • Produce reliable and timely information • Comply with laws and regulations • Set the overall control environment Internal Audit must evaluate and report on controls.

20. The Professional Practice of Internal Auditing Institute of Internal Auditors defines internal auditing as: “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.  It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”

21. Responsibilities With Respect to Fraud • Evaluate the effectiveness of internal controls that prevent and detect fraud • May detect fraud while performing internal audits • May coordinate and conduct fraud investigation

22. Internal Auditor Core Competencies • Problem and solution identification skills • Accounting and control framework proficiency • Influence and leadershipqualities • Conflict resolution and negotiation skills • Project management skills • Business understanding • Proficiency in research and analysis • Familiarity with fraud prevention and detection • Uncompromising integrity and ethics • Emotional intelligence Ability to communicate appropriately is paramount.

23. Designations • CA, CMA, CGA, CPA • Certified Internal Auditor (CIA) • Certified Government Auditing Professional (CGAP) • Certified Financial Services Auditor (CFSA) • Certification in Control Self-Assessment (CCSA) • Certification in Risk Management Assurance (CRMA) • Certified Fraud Examiner (CFE) • MBA, MA

24. Internal and External Audit Internal Audit External Audit Area of focus… Assurance, consulting, and other assessments of financial, operational, and governance topics. Approach… Varies based on users’ objectives. Area of focus… Attests to financial statements and related internal control. Approach… Follows prior work and Audit Standards.

25. Internal and External Audit Internal Audit External Audit Relationship with management… Reports to Senior Management (administratively), and the Audit Committee (functionally). Builds relationships within the organization. Relationship with the audit committee… Functionally reports to Audit Committee and provides information and assurance about a broad scope of topics. Relationship with management… Only a working relationship pertaining to the attestation engagement. Relationship with the audit committee… Attests to the Audit Committee and provides assurance about the financial statements and financial reporting controls

26. Internal and External Audit Internal Audit External Audit Independence… Is independent of departments and activities audited but is not independent of the organization. Standards… Follows the IIA’s International Standards for the Professional Practice of Internal Auditing. Independence… Is independent of the organization. Standards… Follows Audit Standards.

27. Internal and External Audit Internal Audit External Audit Role with respect to fraud… Includes fraud detection steps in internal audits. Investigates allegations of fraud within an organization. Communications… Communicates findings and recommendations for corrective action in audit reports. Role with respect to fraud… Includes fraud detection steps in audit plan. Attests to risk of material misstatement due to fraud. Communications… Communicates recommendations for corrective action in Management Letter.

28. The Professional Practice of Internal Auditing Thank you!