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Who Audits The Internal Auditors ?

When I ask this question, I usually get a variety of answers ranging from "no one" to " the audit committee"! While the Internal Audit Activity is not subject to audit in the same way other company business units  and processes are ,there are ways management can get reasonable assurance that the internal audit department is doing what it is supposed to do. One of these ways is the External Quality Assessment.

 IIA Standard 1300 covers the Quality Assurance and Improvement Program that need to be established by the CAE covering all aspects of the internal audit activity. Standard1312 requires that "External Assessment must be conducted at least once every five years by a qualified,independent assessor or assessment team from outside the organization. The chief audit executive must discuss with the board:

• The form and frequency of external assessment,and
• The qualification and independence of the external assessor or assessment team,including any potential conflict of interest."

The interpretation of the standard explains that external assessment can be in the form of a full external assessment,or a self -assessment with independent external validation.

In addition to the external assessment ,the standards call for internal assessment which must include:

• Ongoing monitoring of the performance of the internal audit activity,and
• Periodic self - assessment or assessments by other persons within the organization with sufficient knowledge of internal audit practises.

Do you think the above is adequate to provide management with reasonable assurance that the internal audit activity is performing its duties in conformity with the IIA standards? If not, what else would you suggest to do,for example:

• Have the external auditors audit the internal audit activity
• Have a peer review by other internal audit activity of an unrelated company.
• Have an external assessment every year or two.

 Please share your experience and thoughts.
 

In The Age of Information, Ignorance Is A Choice !

No further comments from me, the quote speaks for itself !! *

 

 

* A reader to this blog post brought to  my attention that the author of the above quote is Mr.

   Donny Miller .It should be clearly mentioned that I was simply sharing the above picture ( because I  loved it so much ) and had  no intention whatsoever ,to imply that the quote is mine ! The name of the author of the quote was not included in the picture and was not known to me at the time I shared it on this post.
 

The reader accused me of being a "thief "  and of  "plagiarism" , however, regular readers of my posts know  that I always reference the quotes I use to their authors ! Despite the fact that the above post does not in any shape or form imply directly or indirectly ,explicitly or implicitly that the quote is mine ( how would it be mine when I say: no further comments from me and it comes in a form of a picture that is flooding the internet  !!)  ,the reader insists that I have stolen the quote for my own use.
 I am just wondering if this self appointed  "author right's defender" is exposing himself to a libel case ! This is something I am discussing with my legal advisor .

When you read this post, did you get the impression that  I am implying that the quote is mine ? Please provide your feedback.

 

Let me very clear on this issue, I do not approve of any plagiarism ,and it is in my own interest that I defend author rights ,because I publish many articles and blogs and would not appreciate any one "stealing " it !

 



 

Should the CAE Educate the Audit Committee?

Do not expect  all the audit committee members to possess sufficient accounting ,audit and risk management knowledge and experience . In a perfect world it would be great if they do ! As we don't live in such a world ,someone should take the initiative to educate them ,and I believe that this " someone " should be the CAE !

During the brief period when I established and managed an internal audit activity for a multi - billion dollar company ,I took it upon myself to keep open communication lines with management in general and the audit committee in particular in order to keep them abreast of developments in areas relevant to their responsibilities .In the case of the audit committee ,I used to share with them news,articles and publications relating to accounting,audit ,risk management ,corporate governance and other areas of interests . And to make things more interesting ,I used to send them a monthly quiz ! I was pleasantly surprised with the positive reaction of the committee members and their desire to receive more information and quizzes ! In fact ,they were competing to score higher points each time I send a new quiz .

I am fully aware that not all audit committee members will act in the same way, but the CAE should at least try and fulfil this educational role . It not only benefits the audit committee members and the organization ,but helps to strengthen the CAE's relationship with the audit committee.

 

Difficult Audit Customer : No Problem !

During my long career in external and internal audit ,I have always managed to handle all types of audit customers: the easy going ones and the difficult ! My experience covers many countries and many cultures .My secret is very simple , I follow these steps:

1. Know the person :

Before starting and audit assignment ,invest some time to learn about the key person you will be dealing with .Know about his/her educational background , career history ,family status, interests  ..etc.

2. Find a common interest :

There must be something in common  to talk about between you and the person you will be dealing with .It could be family values, sports ,travel  or any other areas of interest .Use this as a door opener .I encourage you to spend few minutes talking about it when you first meet with him/her . Word of caution : never discuss politics or religion and if the subject is raised be neutral !
 People are different and each one needs a personalized approach .

3. Explain why you are performing the Audit :

Always explain the objectives of the audit in advance and what you expect to achieve . You have to send a clear message that you are doing what you are hired to do and that in the process you wish that it will be a mutually beneficial and enjoyable experience !

4. Be Professional & Patient :

No matter how difficult the audit customer is ,always behave in a professional manner and be patient .Your professionalism will pave the way towards a healthy relationship across the organisation .

And finally ,I am a strong believer of the saying: If there is a will ,there is a way .

My 4 P's for work :

Professionalism
Patience
Persistence
Personalisation

Please share your experience !

 

Why Internal Auditors keep telling us that they add value?

Why is it that internal auditors are the most users of the terminology "add value" ? Do you hear other functions in your company use it as often ? Do internal auditors use it to justify their existence to others and/or to convince themselves that they are valuable to their organizations ? And finally do they really add value and how?

The glossary section of the IIA standards defines add value as follows :
"The internal audit activity adds value to the organization ( and its stakeholders) when it provides objective and relevant assurance and contributes to the effectiveness and efficiency of governance,risk management, and control processes." Isn't this what they are supposed to do anyway? Is adding value means doing your job as prescribed by your job description or does it go above and beyond what is expected of you ?

Can you in your own words describe how you add value to your organization using at least one practical example ?

Do you know what is your stakeholders definition of "adding value" ? Did you ever asked them?

I am not trying to offer answers here ,but rather to start a self-dialogue !!

Are you an Internal Auditor at home as well?

Is your career, as an internal auditor, affecting your lifestyle and relationship with others?

It is a fact that our careers affect our lifestyle in one way or another, whether we intend this or not.For example, as an internal auditor, do you find yourself :

- Dealing with others with skepticism without giving them the benefit of the doubt?
- Paying too much attention to details at home? This may not keep your spouse or other family members happy!
- Trying to maintain independence in your relationships with family members and friends when sometimes you have to take sides and be biased?
- Questioning if your actions may result in a conflict of interest all the time?

On the positive side,do you think that internal audit made you :

- A more effective communicator
- An objective person
- A persuader
- Add value and change lives around you
- Vigilant. You pay more attention to your surroundings
- Better understand risks and opportunities
- Improved your decision-making process

Please share your thoughts and experience.