HowDoYouStayRelevantToYourBusiness?

ShagenGanason,CIA

TheInstituteofInternalAuditorsFiji

2017AnnualConference5– 6May2017MarriottResortMomi Bay,Fiji

Tostayrelevant,youneedto….

1. Buildandmaintainpositiverelationship2. ThinklikeSeniorManagement3. Breakdownsilos4. Participateincommitteesandprojects5. Challengethestatusquo6. Reportrealimpacts7. Communicate8. Becomeatrustedadvisor

Roleofinternalaudit

• ThefundamentalroleofInternalAuditisprovidingreliableassurance inahighlyefficientmanner withaviewtoprovidinginputintoimprovement ofbusinessprocesses.

• Ahighlyeffectiveauditfunctionhasanotableimpactonthebusinessasaresultofdeliveringontheneedsofthebusiness.

Acommondisconnect?

Thinklikeseniormanagement

EnterpriseRiskBusiness

Processes

Credit

Culture

IT

BrandLiquidityRegulatory

Traditional

NonTraditional

Strategicfailuresmattersmost

NonTraditionalAssurance(Strategic/Culture/ValueforMoney)

TraditionalAssuranceFocusLegal/Operations/IT/Compliance

81% 19%

Basedon2016Fortune1000companies -Frequencyofmajordeclines inmarket

capitalisation

Regulatoryassistance

§ Reviewmanagementresponsestoregulators§ Provideadviseon

• Completenessofdocumentation• Clarityofresponses• Soundnessoflogic• Accuracyofcalculations

§ Sharedocumentationrelatedto• Processworkflows• Controls• AuditCoverage

Rootcausesoforganisationdecline

§ Declineincoreproductdemand§ Poormergerintegration§ Competitiveinfringement§ Destructivepricewar§ Marginpressure§ Investorlostofconfidence§ Seniormanagementturnover§ Corporaterestructuring

§ Poordemandforecasting§ Commoditypricedecline§ PoorITintegration

Source:ForbesMagazine2016,“RootcausesofMajorMarketCapitalisationDecline”

Strategicprojects

Strategic

Collaborate

TechnologyDrivenRealtime

HighVisibility

Participation

ManagementInternalAuditIT

Projectparticipationadvantages

§ Ensureinternalcontrolsembeddedinneworchangedprocesses• Managementcan“getitright”beforegolive• Auditcan“recommend”incollaborativeenvironment

§ Relationshipbuilding• BuildrelationshipswithbusinessandIT management• Positivevisibilityinstrategicprojects

Projectparticipationuniverse

§ Developandmaintainaprojectparticipationuniverse

§ Useriskbasedmodelstoscoreandselectprojectsforengaging

§ Includeinauditplantoalignauditcommitteeandobtainresources

Projectexecution

BusinessRequirements• Completeness• Management• Approvals• RegulatoryCompliance

Testing• Regression• SystemIntegration• UserAcceptance• ManagementApprovals

SystemConfiguration• SecuritySettings• BusinessRules

OperationReadiness• UserTraining• UserProvisioning• PolicyUpdates• Go/NoGoDecisions

EPMOandSteeringCommittees

Breakdownthesilos

Technology BusinessUnits

C-Suite Stakeholders

Seniormanagementaddressrisksilosandotherorganisational disconnects.InternalAuditorshavebroadorganisational viewandneedtouseit.

Participateincommittees

§ NewProduct§ NewBusinessVenture§ SteeringandGovernanceCommittees§ ITSteeringGroups§ EnterpriseRiskManagement§ OperationalRiskManagement

Challengethestatusquo

§ Challengeexistingcontroldesigns(especiallymanualcontrols)

§ Couldresultinparadigmchangingfindings

§ Don’tbeafraidtoaskquestions• Whatpercentageofyourjournalentriesaremanualvs.automated?• Whydoyouneedtoprintthesereports?• Howdoyouobtainsignaturesforapproval?• Whendoweneedtogetthematerialinby?

Reportrealimpacts

PurchaseOrderEntryError

InventoryDataCorrupted

RealManagement

Impact

Communicate

§ Communicatefrequently§ Ensureagreementonfacts§ Betransparent§ Beconsistent§ Buildtrust

Routetobecomingatrustedadvisor

Controlandcompliance

Businessinsights

Strategicandvaluedtrustedadvisor

Non-negotiable BusinessRelevance TrustedAdvisor

TheEnablementGap

TheCompetencyGap

The

Transformation

Gap

Routetobecomingatrustedadvisor

Controlandcompliance

Businessinsights

Non-negotiable BusinessRelevance

BridgetheEnablementGap

§ Traditionalriskassessmentandplanning(notdrivenbybusinessrisk)

§ Heavyfocusonauditableunitsandlocations

§ Limiteduseofanalyticsandmodelling§ Limitedtraininganddevelopment§ Lackofeffectiveprioritisation§ Unwillingtochange§ Primaryfocusnotonbusinessprocess

improvements

Routetobecomingatrustedadvisor

Controlandcompliance

Businessinsights

Strategicandvaluedtrustedadvisor

Non-negotiable BusinessRelevance TrustedAdvisor

BridgetheCompetencyGap

§ Rotationalresourcingmodel§ Scaletoadequatelystaff

criticalareas§ Auditactivity=available

resource§ Exploreandexploitnon

traditionalaudits§ Alignwithstrategicplanand

initiativestosupportcompetitiveinsight

Comingtogether

§ No“us”versus“them”– itisonly“us”fromnowon

§ InternalAudithasresponsibilitytohelpmanagement

§ “Big”issuesmighthavebeenavoidedwithbetteraudits

Biginternalauditissues

§ Shareauditinformationwithmanagement§ Understandimplications(regulatory,financial,etc.)onbusiness

§ Explaininunbiasedtermstoseniormanagement§ Helpmanagement“connectthedots”asrequired§ Assistinadditionalimpactanalysis§ Participateinremediationprojects

Summary

§ Internalauditcanfosterpositiverelationshipsbythinkinglikeseniormanagement

§ Projectparticipationprovidesopportunitiestoengagewithseniormanagementinstrategicsetting

§ Dealingwith“big”issuesprovidesuniqueopportunitiestocontribute