adding value through internal audit pres_laimay_en
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www.eciia.euEnhancing governance through internal audit
IAS ConferenceAdding Value through Internal Audit
Internal Auditors:
The Good?
the Bad?
the Ugly?
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Thats the question!
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RISK
Audit Committee & Board
Senior Management
Management and employees
Risk Management
Financial reporting review
teams
Environmental, Health
and Safety Auditors
Compliance
Quality assurance
Internal auditors
External auditors
Other External assurance
providers
The Stakeholders' relationshipIdentify assurance providers
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Keys to success for Internal Audit:
Multi-dimension approach
Stakeholder expectations alignment
Governance effectiveness
Assurance provider maturity
Assurance map: concept of the 3 lines of defence
CAE engagement
The Stakeholders' relationshipGood practices
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Interaction and cooperationwith External Audit
Why cooperate?
Help Board to obtain more comprehensive view of operations and risks
Avoid duplication of audit
Coordination of activities and recommendations, coordinated benefit formanagement
If external audit, to build on internal audit regulated by ISA 610
Scope of risk examination
External audit gathersrisk information limitedto financial reporting
risks Internal audit looks at
strategic, business andcompliance risks
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Business partner relationship
Instil the concept of customer service throughout theaudit process : act as if you had competition and your
audit customer had a choice of provider
Do not plan in silos, include all relevant parties, asappropriate in the initiating and planning phases of
internal audit engagements
Run each engagement as a project
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Do
Identify all stakeholders
Ask for feedback from the differentstakeholders
Listen to stakeholders' expectations
Organize regular meetings withstakeholders
Understand the business
Make forward-looking recommendations
Focus on results and not on tasks
Invest in personal development
Have fun on assignments Keep the discussion and dialogues open
Work in silos
Duplicate the work of others and vice-versa
Only mention bad things
Work with no goal
Reject changes
Follow one stakeholder rather thanothers in conflicts
Forget about ethics
Be too technical
Escape the trust of others Be paralyzed by the fear of failure
Do not Do !
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Five imperatives to address challengesand opportunities in the year ahead
Assess/address emerging stakeholder expectation gaps onfocus and capabilities
Develop and implement knowledge and talent acquisitionstrategies
Develop/enhance continuous methodologies for assessingrisks
Assume a leadership role in coordinating / aligning the 2ndand 3rdlines of defence
Seek out innovative solutions to enhance internal auditefficiency
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Making the most of the Internal Audit Function:Recommendations for Directors and BoardCommittees
Evaluating the need for establishing an internal audit function when such
function does not exist
Assessing and approving the internal audit charter
Ensuring effective communication lines between the Chief Audit Executive
and the Board
Evaluating the internal audit plan
Assessing the staffing of the internal audit function
Gaining assurance regarding the quality of the internal audit functions work
Overseeing the relationship between the internal audit function and the
organization's centralized risk monitoring function
Coordinating the internal audit function with the work of external audit
Assessing internal audit reporting
Monitoring management follow-up of internal audit recommendations.
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European Confederation of Institutes
of Internal Auditing (ECIIA)
The ECIIA represents the beacon of the Internal Auditprofession in the wider geographic area of Europe and the
Mediterranean basin:
35 countries
40.000 members
Primary objective of furthering the development of corporate
governance and internal audit through knowledge sharing,
key relationships and regulatory environment oversight
Our mission is to promote the Internal Audit
profession at the European Level
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ECIIA publications
Guidance on the 8thEU Company Law Directive Article 41(with FERMA) Parts 1 & 2
Reinforcing audit committee oversight over global assurance andinternal audit
Corporate Governance Codes on Internal Audit
Making the most of the internal audit function (with Ecoda)
The role of internal audit under Solvency II
Improving cooperation between external and internal audit
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ECIIA promotes the 3 LOD
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The Three Lines of Defence Model for risk assurance mapping
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Internal Audit PositioningApplication of the 3 Lines of Defence model
To ensure clarity of roles and responsibilities in organizationalgovernance, the 3 lines of Defencemodel defines three levels ofcontrol:
1STL
INE
Operational
management
has ownership, responsibility and accountability for
assessing, controlling and mitigating risks
2NDL
INE Internal governance
functions
(Group support and
control functions)
monitors and facilitates the implementation of
effective risk management practices by the 1st line
and assists risk owners in reporting adequate risk-
related information throughout the organization
3RDL
IN
E
Internal Audit
provides assurance to the Group governing body and
senior management on the organizationseffectiveness in assessing and managing its risks and
related internal control systems, including the manner
in which the 1st and 2nd lines operate
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Internal Audit Positioning
The Three Lines of Defence model has helped articulateinternal auditsrole / value
Encroachment between 2nd and 3rd lines of defence is
occurring
Audit / oversight fatigue presents challenges andopportunities
Internal audit can be a leader in coordinating key players
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