Internal Auditing - Intro to Internal Auditing

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Internal Auditing - Intro to Internal Auditing
2014-09-21 22:56:54
Internal Auditing Intro
Internal Auditing - Intro to Internal Auditing
Internal Auditing - Intro to Internal Auditing
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  1. Internal Audit
    Independent, objective assurance and consulting activity to add value to company
  2. How is value added
    by improving opportunities to achieve objectives, id op improvements ad or reduce risk exposure through assurance and consulting services
  3. Value Proposition OVERVIEW
    • Assurance
    • Insight
    • Objectivity
  4. Value Proposition - ASSURANCE
    • Governance
    • Risk 
    • Control

    to achieve strategic, operational and compliance objectives
  5. Value Proposition - INSIGHT
    • Catalyst 
    • Analyses 
    • Assessments

    Improve org effectiveness by providing insight and recommendations based on analyses of data and business processes
  6. Value Proposition - OBJECTIVITY
    • Integrity
    • Accountability
    • Independence

    objective source of independent advice
  7. Defining Internal Audit
    • Help org achieve objectives
    • Evaluate/improve risk mgmt, control, governance
    • Assurance and Consulting Activity
    • Independence and objectivity
    • Assurance and consulting services
  8. Objectives - OVERVIEW
    • Strategic
    • Operational
    • Reporting
    • Compliance
  9. Objectives - STRATEGIC
    value creation choices mgmt makes on behalf of stakeholders

    ex:grow org mrkt share by acquiring complent business
  10. Objectives - OPERATIONAL
    Pertain to effectiveness and efficiency of org operations

    ex: ship all orders no later than 24 hrs aft reciept
  11. Objectives - REPORTING
    pertain to the reliability of internal and external reporting of financial and nonfinancial information

    ex: record only valid transactions
  12. Objectives - COMPLIANCE
    adherence to applicable laws and regulations

    ex: comply with OSHA
  13. Evaluating and Improving - OVERVIEW
    • Governance 
    • Risk Management
    • Control
  14. Evaluating and Improving - GOVERNANCE
    • process conducted by the board of directors to
    • authorize, direct and oversee management toward the achievement of the organization’s objectives
  15. Evaluating and Improving - RISK MANAGEMENT
    process conducted by management to understand and deal with uncertainties (risk and opportunities) that could affect the organization’s ability to achieve its objectives
  16. Evaluating and Improving - CONTROL
    process conducted by management to mitigate risks
  17. Assurance and Consulting Activity - OVERVIEW
    Internal Assurance: Assess evidence relevant to subject matter of interest and provide conclusions

    Internal Consulting: Provide advice and other assistance
  18. Independence & Objectivity
    IND: Org status of IA function, CAE report to level within org that has sufficient authority

    OBJ: mental attitude of indv internal auditors, auditor able to make impartial unbiased judgements, not to be involved in day to day operations
  19. Systematic and disciplined approach
    3 fundamental phases in an interanal audit engagement
    • Planning
    • Performing 
    • Communicating outcomes
  20. Evaluating engagement involves
    • Reviewing evidence gathered during the engagement
    • Researching logical conclusions
    • If consulting, formulating practical advice based on evidence
  21. Accounting
    Collection, classification summarzation and communication of financial data

    Measurement and communication of business events and conditions

    Reduce detailed info to manageable and understandable proportions
  22. Auditing
    Does not have the task of measuring or communicating business events and conditions, but rather to review

    Emphasizes proof, the support for financial statements and data
  23. External Assurance Services
    Sarbanes Oxley requires a U.S. public company’s internal auditors to also attest to the effectiveness of the company’s internal control over financial reporting as of a balance sheet date

    CPA’s audit opinion is based on a recognized framework such as COSO 

    Both reports are public documents

    Benefits provided primarily for the benefit of third party

    Third parties rely on this information when making financial decisions about an rganization
  24. Internal Assurance Services
    Also provides financial reporting assurance services

    • Primary difference is the audience; internal auditors provide their services primarily
    • for the benefit of management and the board of directors

    • Sarb-Ox requires the CEO and CFO to certify quarterly and annual filings and requires management to assess and report on the effectiveness of internal control over financial
    • reporting

    • Management relies on the IA function to provide them with confidence regarding the
    • truthfulness of their financial reporting assertions
  25. IIA
    Institute of internal auditors
  26. Professional guidance
    provided by IIA in IPPF (International Professional Practices Framework)

    • Mandatory 
    • Strongly Recommended
  27. Mandatory Guidance
    • 3 elements
    • 1) Internal Audit Definition
    • 2) Code of Ethics
    • 3) Standards
  28. Strongly Recommended Guidance
    • Includes:
    • Practice Advisories
    • Position Papers
    • Practice Guides