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Internal Auditing:One Professional’s Perspective

Russell D. Price, CPA, CIA, CISASr. Audit Manager

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Agenda

Introduction What is Internal Auditing? How to get started in Internal Auditing The IIA and You

Ask questions at any time … don’t be shy!Ask questions at any time … don’t be shy!

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Introduction – Russell Price

Current Assignment: Sr. Internal Audit Manager Intel experience: 7.5 years

– Sr. Audit Manager – IT / Corporate Finance– S-Ox §404 IT Program Manager– Prior roles: eAP Program Manger; PARIS Program Manager

Prior experience: 18 years– Big 4 Audit / IA / Business Consulting (Andersen, E&Y) – 6 years– Operations / Corporate / EMEA F&A (Tektronix) – 3 years– Operations Management / F&A (P&G, Frito-Lay) – 9 years

Education / Certifications:– BSChE – Oregon State University– MBA – Portland State University– CPA – Washington, Oregon (reciprocity in progress)– CIA (Certified Internal Auditor)– CISA (Certified Information System Auditor)

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What is Internal Auditing?

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The IIA’s Definition ofInternal Auditing

Internal auditing is: An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations

It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

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Internal and External Audit

Internal Auditors Integral to organization Ongoing monitoring and

assessment Concerned with financial

and non-financial risks Detection / prevention of

fraud Future focus

External Auditors Independent of the

organization Annual opinion on

financial statements / internal controls

Concerned with financial risks

Historical focus

Different but Complementary RolesDifferent but Complementary Roles

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Cornerstones for Corporate Governance

Internal audit provides assurance to management and the audit committee that risks are understood and managed properly.

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Key Responsibilities ofInternal Auditors

Function as one of the cornerstones of good governance

Provide value-added services Evaluate the organizations risk management process

Recommend process and controls improvements

Perform consultative activities

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Impact of Enterprise Risk ApproachCash/Liquidity

IP

Policy Compliance

BOD Practices

Nat Disaster/Terrorism

Technology (Operational)

Supply Chain

Volume

Cost

Pricing

Product Roadmap

Brand

Market Intelligence

Competition

Human Capital

Acquisition Integration

F/R Compliance

Local Laws/Restrictions

Fraud/Other Misconduct

Succession Planning

Technology (Strategic)

Customer Satisfaction

Channel

Capacity Avail. & Utilization

Resources

Reputation

Product Liability

Anti-Trust Compliance

Tax Compliance

FCPA Compliance

Product Execution

Partnerships

Investment

Divestiture Mgmt

Restructuring

Valuations & Estimates

Foreign Currency

Customer Credit

Planning & Forecasting

EHS Compliance

Contract Compliance

Privacy Compliance

Market Concentration

Network & IT Infra (Strategic)

Inventory

Manuf. Cost & Affordability

Manuf. Start-up Cost

Network & IT (Operational)

Portfolio Management

Spending

None

Impact

Likelihood

Product Qual. Audit

Judged Demand Audit

Digital Home CE POP Audit

IMFT JV Audit

Demand Forecast Apps

Site Selection Process Audit

HHG Divestiture & Supply Agree. Audit Design Tool Apps

IT Governance

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The Profession of Internal Auditing

Allows for an expedient, high-level understanding of the organization and industry

Exposure to senior-level management Transferable skills/disciplines Networking opportunities Expanding profession Potential travel

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It’s A Great TimeTo Be An Internal Auditor

Growing Profession … thanks to SOX! Not Just for Accountants Good Starting Salary and Upside Potential Great Opportunities High Visibility

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Internal Audit Salaries - 2006

Average total base compensation

$177,515

$126,798

$97,041

$79,907

$54,196

$0 $40,000 $80,000 $120,000 $160,000 $200,000

CAE

Director

Manager

Senior

Staff

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Public Accounting Salaries - 2006

Average total base compensation

$195,000

$125,000

$95,000

$65,000

$45,000

$0 $40,000 $80,000 $120,000 $160,000 $200,000

Partner

Senior Mgr

Manager

Senior

Staff

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Attributes of aSuccessful Internal Auditor

Demonstrates Objectivity and Integrity Strong Analytical / Fundamental Auditing Skills

Creative, Inquisitive, Problem Solver Sound Business Acumen Good Negotiator / Influencer Active Listener, Exceptional Communicator Confident Intuitive

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How do I becomean Internal Auditor?

Take relevant courses in school Internships / entry-level programs Gain various types of experience

– Public accounting

– Private industry

– Government

Network at local Professional Associations (e.g. the IIA)

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The Institute ofInternal Auditors (IIA)

International Professional Association (www.theiia.org)

Established in 1941 Global Headquarters in Florida Over 125,000 members 165 countries and territories

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The IIA Vision

The IIA will be the global voice of the internal audit profession: Advocating its value, promoting best practices, and providing exceptional service to its members

The IIA’s Broad Objectives

Acceptance of the internal auditing profession

Increase internal auditing capacity Provide better services for our members

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Development ofStandards and Guidance

Internal Auditing Standards Board Exposure Draft Process Approval and Implementation Date Professional Issues Committee

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Certification Program

Certified Internal Auditor Certified Government Auditing Professional Certification in Control Self-Assessment Certified Financial Services Auditor

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IIA Membership

The IIA is an association of individual members

All members commit to follow the IIA Code of Ethics and International Standards for the Professional Practice of Internal Auditing

Members are served via local chapters or affiliates, or directly as members-at-large (where no chapter/affiliate exists)

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“What’s in it for Me?”

Professional Guidance Advocacy Training Networking* Certification* Specialty Programs Technology Publications Services* Local Contacts And more…

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Audit Career Center

Career Opportunities Online Resume Search Postings

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How Do I Join The IIA?

In Canada, the Caribbean, or the United States join The IIA directly.

Outside Canada, the Caribbean, or the United States join The IIA directly through an IIA affiliate in the local region