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TRANSCRIPT
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The 4th AFIIA Conference
Insight to Foresight: The New Imperative for InternalAudit & Governance
QUALITY ASSURANCE
ACCRA – GHANA
18 MAY 2017
Agenda
• Introduction
• Insight to Foresight
• Quality Assurance
• Maturity Model – The ‘Aha’ Moment
• Conclusion
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Introduction
Quality: Degree of Excellence as seen by ‘Users’.
Insight: Clear and in-depth understanding of asituation to solve a problem or situation.
Foresight: Ability to predict what will be needed inthe future. Plan actions based on this knowledge.
Oversight: Watchful care, supervision, orstewardship.
Governance: The action or manner of governingan organisation or state.
Role of IA/Revised mission in IPPF: Enhance andprotect organisational value by providing risk-based and objective assurance, advice and insight.
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Insight to Foresight
Understandcurrentsituation/problem,solve it andpredict thefuture
4 Facets of Insight – David Rock, ED of Neuro-Leadership Institute
Awareness of Dilemma – Identify the problem to be solved Reflection – Create links and tap into more intelligence Illumination – Take courage to reflect more and think less or at least less logically Motivation – The ‘Aha’ Moment
Dilemma for Internal Audit “Now More than ever, internal auditors will need to
be at the top of their games in order to successfullyaudit at the speed of risk.” Richard Chambers, IIAPresident
Supervisors and Regulators expect more from InternalAudit.
Understand prevailing culture in organisation usingroot cause analysis techniques.
Why is Insight relevant to Internal Audit?
IA needs to challenge current practice, champion best practice and be a catalyst for improvement to deliver strategic objectives. IA has ability to stand back from day –to – day activities and has wider understanding of the organisation. IA has ability to make connections and highlight things not known to management.
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How can I be a more insightful Internal Auditor?
This does not happen by accident. It takes deliberate action.
Insight comes with experience.
Action Matrix:
1. Develop knowledge of your organisation and sector
2. Talk to more people within and outside your organisation
3. Keep track of what is happening in the IA profession
4. Identify a senior person to be your Coach
5. Change your perspective
6. Find Parallels
7. Ask more questions
8. Don’t take things for granted
9. Identify trends and connections
10. Change the way you get messages across
11. Use Metaphors
12. Conduct Quality Assessments
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Quality Assessments
What is QA?R
Rationale for QualityAssurance?
Who needs QA?R
Who Benefits from QA?R
Evaluation of Internal Audit’s compliance with:
Standards, Definition of Internal Auditing and Code of Ethics
Internal Audit and Audit Committee Charters
Organisation's Governance, Risk and Control assessments; Successful/Best practices
Builds confidence, trust and professional credibility of IA
Enhances management and stakeholder buy -in
Response to management concerns and expectations
Promotes compliance with IPPF
Standard 1312 requires IA to have at least 1 external assessment every 5 years
In-house Internal Audit departments
Outsourced Internal Audit departments
Co-sourced Internal Audit departments
Various Stakeholders:
Shareholders, Board and Management
Regulators and other Assurance Providers
Customers/clients
Internal Audit – A Fine Balancing Act
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Pillars of Quality Assurance
QA
Framework
Self Assessment
Full ExternalAssessment
Establish QAIP
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Pillars of Quality Assurance Cont’d:
Establish a QAImprovementProgramme
The IPPF
1300 – Develop & maintain a QAIP that covers all aspects of IA activity.
1310 – Internal & External Assessments
1320 – Communicate results to senior Management & the Board
1321 – Use of “conforms” statement
1322 – Disclosure of Nonconformance
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Pillars of Quality Assurance Cont’d:
On going Monitoring:
Conformance to IIA standards: 2200 : Engagement Planning 2300 : Performing the Engagement 2400 : Communicating Results 2500 : Monitoring Progress
Periodic Self Assessment:
In addition to on going monitoring, Conformance to IIA Standards: 1000 : Purpose, Authority & Responsibility 1100 : Independence & Objectivity 1200 : Proficiency & Due Care 1300 : QAIP 2000 : Managing the IA Activity 2100 : Nature of Work 2600 : Communicating the Acceptance of Risk Definition of Internal Auditing Code of ethics
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Road map to Quality Assurance
QA is a journey:Deming Cycle
Rating for QA:
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Experience with Quality Assurance
Common QA non compliance exceptions: Inappropriate CAE reporting relationships Out-of-date Charters Client perception of inadequate staff knowledge No formalised risk assessment process Inadequate QAIP Consulting omitted from the mission & Charter Inadequate IT coverage or technical skills Lack of performance measures
Challenges with QA: Several IA functions have never had an external QA A number of IA functions are less than 5 years old. IA is not regulated Not aware of the requirement Cost in money & time
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IA Quality Assessment – Bridging the Gap IA Leadership – Actions to take
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The Way Forward – Building Blocks
Expectations are clearly articulated & communicated IA clearly defines, articulates and has metrics to measure its mission &
value IA Plan is regularly updated to respond to changes in entity & business
environment Appropriate time & effort is spent to assess current & emerging risks Appropriate skills mix Leverage internal & external resources Productivity of IA staff is measured & managed Audit methodology is standard & simplified Investments in IA are based on ROI approach Data analytics are deployed for alignment & efficiency IA service provides balance of objectivity & value. Formal quality reviews are regularly done to identify improvement
opportunities. Innovation is embedded in culture of IA.
“It is not that value provided by Internal Audit has necessarily decreased, the value may be the same but a higher investment in thefunction may cause the illusion of decreased value. Executives and Boards are looking for higher return on their investment.”Jean Pierre Verster, Capitec Bank, South Africa
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Conclusion
Quality does not just happen; its earned. Combination of right people, right systems & commitment to excellence. It is a Journey & not a destination Dynamic business environment Dynamic stakeholder expectations Audit in the right context is what adds value Regular QA is critical in our IA journey from Insight to Foresight.
“As Africans, we need to share common recognition that all of us stand to lose ifwe fail to transform our continent” Thabo Mbeki
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Thank youfor the kind attention
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