Are you getting the most from your internal audit function? – Canadian Government Executive

NEWS

SEARCH

HR
AccountabilityAuditManagement
September 22, 2014

Are you getting the most from your internal audit function?

Today’s business environment changes rapidly to adjust to evolving conditions and government priorities. In these times of economic constraint, internal auditors can do so much more than simply test for compliance with policy and regulations; they can be assessing the adequacy and reliability of the controls and identifying improvements in the processes and business systems.

This requires increased communication and cooperation between managers and internal auditors. The success of this collaboration depends on managers’ willingness to accept and embrace internal audit as a value-added function.

For internal audit results to provide value, managers must respect the independence and objectivity of the internal audit function. In turn, the chief audit executive must build solid relationships with managers based on trust, respect, openness, and ongoing communication. “Unlocking the Power of Internal Audit” (CGE May 2014) talked about audit as a trusted advisor and stressed the importance of collaboration between management and internal audit. Together, they must be able to discuss risk to the achievement of corporate objectives and the effectiveness of the associated controls and mitigation strategies. This will help ensure that audit is focused on the risks that matter to senior management most.

The Institute of Internal Auditors (IIA) has developed a systematic approach to enhance communications on risk management and control based on clearly defined roles and responsibilities along what it refers to as “three lines of defence.” Management control is the first line of defence. Operational managers own and manage risks, and are responsible for implementing corrective actions to address deficiencies. The second line of defence is the oversight functions established by management such as risk management, comptrollership, and compliance. Internal audit acts as the third line of defence by providing independent assurance on the effectiveness of governance, risk management, and internal controls, and by providing advice and assistance on the manner in which the first and second lines achieve risk management and control objectives.

However, to effectively do this, internal audit must move beyond simple compliance audits. It must not only ensure controls are working but also provide strategic advice and assurance. Carmen Abela, in “Unlocking the Power of Internal Audit,” introduced the important role of audit, in collaboration with management, in providing oversight, insight and foresight. Oversight to provide timely and accurate assessments of controls; insight to understand the current control, risk and performance environments; and foresight to help the organization identify emerging risks and mitigate future impacts.

This requires auditors to understand the business, the operational and administrative systems, and the information that is being used for decision-making. The fastest way to accomplish this is through data analytics – as long as senior management ensures that internal audit is given independent access to the data necessary to test key controls, and monitor and assess indicators of risks.

Long a staple of internal audit, data analytics is no longer a nice-to-have – it is a requirement. It provides auditors with the ability to perform descriptive, diagnostic, prescriptive and predictive analysis. Descriptive to identify and explain what happened; diagnostic to understand why it happened; prescriptive to develop recommendations to address the issue; and predictive to look at what will happen and to prepare for it. The descriptive and diagnostic analyses support audit’s oversight role; the prescriptive analysis provides audit with independent insight into the efficiency and effectiveness of operations; and predictive analysis provides foresight into emerging areas of risk. Through data analytical techniques, audit can contribute to the continuous improvement of risk management processes, the efficiency and effectiveness of the governance and control frameworks, and improve information for management decision-making.

As with all aspects of government operations, while technology is critical to success, it remains underutilized. The exploitation of the power of analytics requires management support in ensuring that the data has integrity and that it is accessible to audit. It also requires auditors to develop the skills to be able to obtain, analyze and interpret information in meaningful ways.

One of the most important value-added contributions internal audit can make is the independent review – based on a solid understanding and assessment of the operational environment – of the changing and emerging risks and the functioning of critical controls.

0 comments

There are no comments for this post yet.

Be the first to comment. Click here.

Accountability
 
Ships docked in a harbour may not be going anywhere; however,...
 
The International Monetary Fund (IMF) in issuing its annual review of...
 
There’s no shortage of organizations claiming to have a digital transformation...
 
Cybersecurity professionals have sounded the alarm for years, and they are...
 
Cost estimation is becoming an extremely important skill within government due...
 
In this special episode of CGE Radio, your host John Jones...
 
Security professionals have an obligation to communicate risks and recommendations to...
 
Risk is always present in any undertaking, no matter the size...
 
Cost overruns have become institutionalized in the federal government, according to...
 
Last year, procurement Minister Jody Foote was prompted by the swirling...
 
Professionals, managers, and executives in the cost estimation industry can gain...
 
In this episode, hear from Carl Hammersburg, Manager, Government and Healthcare...
 
A new study from the Conference Board of Canada gives our...
 
In the world that we are living in today, free and...
 
The delivery method developed by Sir Michael Barber, chief adviser to...
 
Rules and accountability are helpful in developing and standardizing processes but...
 
Canadian doctors were told that climate change impacts human health and...
 
Even as talks between the government and federal workers affected problems...
 
The largest effort in 20 years to seek public input on...
 
Ottawa has overhauled the process by which justices are picked for...
 
Please to view this Content. (Not a member? Join Today! )...
 
In this episode, editor-in-chief, Patrice Dutil talks about the need for...
 
As much a 20 per cent of grade seven students in...
 
Please to view this Content. (Not a member? Join Today! )...
 
Upon receiving numerous complaints regarding add-on fees that turn making economy...
 
Are you absolutely clear what the government wants to achieve? Are...
 
Please to view this Content. (Not a member? Join Today! )...
 
Please to view this Content. (Not a member? Join Today! )...
 
Please to view this Content. (Not a member? Join Today! )...
 
Written By Jason McNaught The Public Service Alliance of Canada was...
 
Independence has long been regarded as a cornerstone of the auditing...
 
Canada is a diverse nation, in language, culture, geography, and, ultimately,...
 
Public sector organizations are under increasing pressure to identify all risks...
 
The government of Canada has implemented several measures over the past...
 
Whether at the territorial, provincial or federal government level, internal audit...
 
An organization’s reputation can take years to build but it can...
 
On October 30, Ontario began second reading of the Public Sector...
 
In the well-known children’s story, an Emperor falls victim to the...
 
The Nova Scotia Office of the Ombudsman is a small operation...
 
I think the ombudsman needs to be independent, because without independence...
 
Today’s business environment changes rapidly to adjust to evolving conditions and...
 
The best internal auditors actually are really good managers first. I...
 
The recent controversy about the actions of some staff members in...
 
Most professionals don’t need more than a sentence at a cocktail...
 
Recent research by the Institute of Internal Auditors Canada aims to...
 
When is it that a politician becomes part of the governing...
 
It’s been a busy couple of weeks on the information, privacy...
 
In 1996, a new budget watchdog, the Parliamentary Budget Officer, was...
 
The Ontario government is moving forward with the creation of a...
 
The Office of the Public Sector Integrity Commissioner of Canada (PSIC)...
 
After the Auditor General’s (AG) report was released on April 30,...
 
In the U.K. system, Permanent Secretaries are what we call Deputy...
 
We are living in a period of rapid change and limited...
 
US public sector employees don’t trust their management to do the...
 
The news of Mark Carney’s nomination as the new Governor of...
 
Following Singapore’s independence in 1965, the controversial leadership of Lee Kuan...
 
Over the past few years, the preparation and delivery of the...
 
In healthcare, cost-cutting can result in cutting what is valued most...
 
For over 20 years Colin Bennett has been exploring issues of...
 
Even before controversy shook the organization to its foundation, Ornge was...
 
It will be the largest international multi-sport event ever held on...
 
We’ve all seen the headlines – BC Ferries, Ornge, la Caisse...
 
It can happen, and it’s noteworthy when it does. Government, business...
 
Kevin Page’s mandate as the first Parliamentary Budget Officer comes to...
 
Governments are challenged to meaningfully mitigate the effects of the financial...
 
Canada is facing a huge financial challenge brought on by massive...
 
For the past one hundred years, democratic states have been moving...
 
It’s so much easier and less painful to learn from the...
 
CGE Vol.13 No.7 September 2007 "If the Public Service, as a...
 
When pondering leadership, we immediately think of exercising our influence downward...
 
CGE Vol.13 No.1 January 2007 "How can I be held accountable...
 
CGE Vol.13 No.2 February 2007 Canada’s Performance 2006 is the sixth...
 
CGE Vol.14 No.1 January 2008 The furor over the $300,000 that...
 
CGE Vol.14 No.2 February 2008 Let’s say you’re a senior manager,...
 
CGE Vol.13 No.1 January 2007 Perhaps it’s a legacy of the...
 
The Independent Blue Ribbon Panel on Grants and Contributions called for...
 
Au Canada, le secteur bénévole et à but non lucratif vit...
 
As the global economy struggles to regain some forward momentum, Canadian...
 
This will be a defining budget for Stephen Harper. It will...
 
It is difficult to determine when the debate about the need...
 
For the next few years, the federal government’s overarching agenda will...
 
Much of the current conversation about the federal government’s economic agenda...
 
Bill Greenlaw is the elected president of the Institute for Public...
 
Have you ever asked yourself the question: ‘How would I evaluate...
 
Last fall, Alberta’s Employment and Immigration department posted online the workplace...
 
In 2006 the world was feeling the aftershocks of a number...
 
CGE Vol.13 No.4 April 2007 Robert Parkins, editorial director, met recently...
 
In the past two decades, the nature of the state has...
 
Please to view this Content. (Not a member? Join Today! )...
 
Some title Some author
Some excerpt
 
Some title Some author
Some excerpt
Ships docked in a harbour may not be going anywhere; however,...

Member Login

Forgot Password?

Join Us

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.