Managing the Internal Audit Activity

Managing the Internal Audit Activity - Managing the...

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Managing the Internal Audit Activity Who will manage the IAA? The CAE Is responsible for properly managing the IAA Should: 1. Establish risk-based plans 2. Communicate plans and resource needs to senior management and the board for their approval 3. Develop policies and procedures 4. Coordinate efforts with other service providers 5. Report periodically to senior management and the board 6. Develop a quality assurance and improvement program for the IAA. RISK-BASED PLANS The CAE establishes: Risk-based plans à audit strategy To determine the IAA’s priorities Consistent with the charter and goals of the organization RISK-BASED PLANS Audits should be planned and conducted according to the risk level, that is: a. High-risk auditable areas should be reviewed first, followed by b. Medium-risk areas c. Low-risk areas *Should be reviewed only when audit resources are available. RISK-BASED PLANS Risk analysis is done prior to the start of an audit, where the following factors are very important to consider: a. System complexity b. System changes c. Results of prior audits *These factors determine whether an auditable area is high risk, medium risk, or low risk. PLANNING FOR THE IAA Should be based on: Risk assessment and exposure To provide information to mitigate risk Risk Assessment is a systematic process for assessing and integrating professional judgments about probable adverse conditions and/or events. The risk assessment process should provide a means of organizing and integrating professional judgments for development of the audit work schedule. Planning for the IAA: involves establishing: a. Goals b. Engagement work schedules c. Staffing plans and financial budgets
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d. Activity reports PLANNING: a) Goals à The traits of internal auditing goals: Goals should be: accomplished within specified operating plans and budgets measurable accompanied by measurement criteria and targeted dates of accomplishment. b) Engagement work schedules Engagement work schedules should include: (a) what activities are to be performed; (b) when they will be performed; (c) the estimated time required, taking into account: the scope of the engagement work planned and the nature and extent of related work performed by others. *Work schedules à answer the questions what, when, and how long. c) Staffing Plans and Financial Budgets Include: The number of auditors and Their required competencies (qualifications) Are based on: Works schedules Administrative activities Training requirements The CAE’s responsibilities for the IAA’s Human Resource Development Program The program should provide for: Job descriptions à main consideration Selecting competent people Appraising performance Counseling on performance and professional development The best source of the CAE’s information for planning staffing requirements:
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Managing the Internal Audit Activity - Managing the...

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