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Spotlight On Internal Auditing Diablo Valley College November 5, 2009 Kirk Rehage IT Internal Audit

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Title: Spotlight On Internal Auditing Diablo Valley College November 5, 2009 Kirk Rehage IT Internal Audit


1
Spotlight On Internal Auditing Diablo Valley
College November 5, 2009 Kirk Rehage (IT
Internal Audit Manager, Member of IIA-Northern
California East Bay Chapter Board of Governors)
Ahmad Ghafouri (Certified Internal Auditor,
Chairperson of IIA-Northern California East Bay
Chapter Academic Relations Committee)
2
Agenda
  • What is Internal Auditing?
  • Who are Internal Auditors and what do they do?
  • What does it take to be an Internal Auditor?
  • Internal Audit functions types of audits
  • Why a career in Internal Auditing?
  • How to get into Internal Auditing
  • Beyond Internal Auditing
  • A day in a life of an Auditor
  • Institute of Internal Auditors
  • Certification for Internal Auditing

3
Internal Auditing
4
The IIAs Definition of Internal Auditing
  • Internal Auditing is an independent, objective
    assurance and consulting activity designed to add
    value and improve an organizations operations.
    It helps an organization accomplish its
    objectives by bringing a systematic, disciplined
    approach to evaluate and improve the
    effectiveness of risk management, controls, and
    governance processes.

5
Corporate Governance
  • Ensures that
  • Internal Controls are strong
  • Reporting is accurate
  • Ethics are maintained
  • Oversight is effective
  • Risk is mitigated
  • Investments are protected

6
Internal vs. External Auditors
  • Internal Auditors
  • Integral to organization
  • Ongoing monitoring and assessment
  • Concerned with financial and non-financial
  • Future focus
  • Prevention of fraud
  • All areas of the company. All types of audits
    Financial, Operational, Assurance, consultative,
    governance, computer, and fraud investigation
  • Identifies and qualifies key business risks to
    estimate probability of occurrence and impact on
    business.
  • Follows through with management to ensure
    corrective action is taken to resolve control
    weaknesses identified.
  • External Auditors
  • Independent of the organization
  • Annual opinion on financial statements
  • Historical focus
  • Primarily attests to financial statements and the
    internal controls that, if inadequate, can lead
    to a misstatement in the financial statements
  • Identifies key transactions and exposures for
    financial statements.
  • Limits follow-up primarily to financial areas.

7
Who are Internal Auditors?
  • Report functionally to the Audit Committee of the
    Board of Directors and administratively to the
    CEO or CFO
  • Work in partnership with all functions within the
    company to safeguard the assets of the company
    and improve business processes
  • Operate in accordance with the International
    Standards for the Professional Practice of
    Internal Auditing

8
Internal Audit Functions
  • Evaluate the organizations risk management
    process
  • Evaluate policies, procedures and controls
  • Recommend process improvements
  • Perform consultative activities, investigations,
    etc.
  • Review for compliance (laws, regulations, etc.)

9
Risks to the organization
Source Auditing Assurance Services, TJ Louwers
et al, 2006.
10
What does it take to be an Internal Auditor?
  • Education Bachelor or Master degree generally
    in a business administration related field
    (Accounting, Finance, Economics, Information
    Systems, Management, International Business)
  • Good communications skills and people skills
  • Analytical skills we are here to help
  • Strong ethics walk the talk
  • Curiosity and a sixth sense
  • Industry experience
  • Passion for what you do
  • Willingness to travel US and International
  • Fluency in another language (e.g. Spanish) very
    helpful for multi-national companies

11
What does it take to be an Internal Auditor?
  • Continuing education keeping up-to-date with
    most recent IIA standards and best practices
  • Professional certification
  • CIA Certified Internal Auditor
  • CISA Certified Information Systems Auditor
  • CFE Certified Fraud Examiner
  • CPA Certified Public Accountant
  • Other
  • CCSA Certification in Control Self Assessments
  • CGAP Certified Government Audit Professional
  • CFSA Certified Financial Services Auditor

12
Types of audit assignments
  • Financial (procurement, payables, sales,
    receivables, fixed assets, inventory, payroll,
    compliance)
  • Operational (refinery, inventory warehouse, etc.)
  • Sarbanes Oxley (assess effectiveness of the
    financial control framework to ensure accuracy of
    financial statements)
  • Application Auditing (user access profile, back
    up recovery, interface, change controls)
  • Information Technology (systems e.g. SAP)
  • Corporate Compliance (International Trade,
    Foreign Corrupt Practices Act, Information
    Protection, Conflict of Interest)
  • Investigative (fraud, conflict of interest)
  • Contractor (contract compliance, overbillings,
    conflict of interest)
  • Consulting (knowledge of client and industry)

13
Why a career in Internal Auditing?
  • Fast tracking career
  • Gain a much broader perspective of the
    organization as a whole
  • Communicate and interact directly with senior
    management
  • Networking opportunities
  • High visibility
  • Great opportunities (often promoted to management
    level positions more quickly than other
    professions)
  • Transferable skills/disciplines
  • Interpersonal skills
  • Team work
  • Leadership
  • Good pay and reasonable hours
  • Satisfaction that your work leads to improvement
    of the organization

14
Why a career in Internal Auditing?
  • Future demand
  • The global market for Internal Auditors far
    exceeds the professional supply
  • The demand for Internal Auditors is expected to
    increase annually
  • Internal Auditors are needed in all types of
    organizations (public, private, government)
  • A World of opportunities
  • Variety of assignments
  • Meet interesting people
  • Potential travel (US International)
  • Side trip opportunities
  • Learning about different cultures
  • its never boring!

15
How to get into Internal Audit?
  • Take an internal auditing course
  • Gain various types of experience
  • Networking
  • Internal audit internship - Make it count!
  • Seek out organizations that hire staff auditors
    straight out of school
  • Special programs (e.g. Finance Development
    Program)
  • Start in accounting, corporate finance, IT or
    operations, then transition into an Internal
    Audit position

16
Internal Audit Career Path
  • Staff Auditor 0 to 4 years
  • Work under direction of a senior or lead auditor
  • Senior Auditor 4 years
  • Lead audits under direction of an audit
    supervisor or manager mentor/help less
    experienced auditors on the team, review audit
    team members work papers, give feedback to audit
    team members, draft an audit report, main contact
    with the client
  • Audit Manager 6 years
  • Manage several audits or larger audits and report
    to the Audit Director train and mentor staff
    auditors
  • Chief Audit Executive 10 years
  • Responsible for internal audit function in a
    regional location or for entire company

17
Internal Auditing Salary Survey -2008 U.S.
average salaries by position
  • Chief Audit Executive - 125,000
  • Audit Director 118,500
  • IT Audit Director - 140,605
  • Audit Manager 95,000
  • IT Audit Manager - 100,000
  • Senior Auditor 70,545
  • Senior IT Auditor - 84,456
  • Auditor - 52,800
  • IT Auditor - 65,000
  • Source Internal Auditor October 2008 issue
    (For San Francisco/Bay Area, add 25 30 to the
    above averages.)

18
The Institute of Internal Auditors (IIA)
19

http//www.theiia.org
20
  • International Professional Association
  • Established in 1941
  • Global Headquarters Altamonte Springs, Florida
  • More than 160,000 members including more than
    74,000 Certified Internal Auditors
  • 250 Chapters/Institutes in 165 countries
  • Members work in internal (Financial IT)
    auditing, risk management, governance, and
    internal control
  • IIA members come from a wide variety of public
    and private sectors (government, education,
    financial, manufacturing, communications, etc.)

21
IIA-Northern California East Bay Chapter
(NCEB)
  • http//www.theiia.org/chapters/index.cfm?cid216
  • 365 members
  • Members include from Chevron, Safeway, Old
    Republic Title Company, Lawrence Livermore
    National Lab
  • Monthly meetings or periodic seminars. The topics
    can include the following
  • International Financials Reporting Standards
    (IFRS)
  • Leadership for Auditors The Power of Listening
  • Preparing for IT Attack
  • Chief Executive Auditor panel discussion
  • Fraud seminar

22
IIA-Northern California East Bay Chapter (NCEB)
23
IIA-Northern California East Bay Chapter (NCEB)
24
  • http//www.theiia.org/certification/ /

25
  • Requirements to become a CIA
  • Education CIA candidates must hold a bachelors
    degree (or higher degree) or its equivalent.
  • Experience CIA candidates must obtain a minimum
    of 24 months of internal auditing experience or
    its equivalent.
  • Professional Conduct To be eligible for CIA
    Certification an applicant must exhibit high
    moral and professional character and agree to
    abide by the IIA Code of Ethics.
  • Examination Candidates must successfully
    complete all four parts of the CIA exam.

26
  • CIA Exam
  • Four parts
  • Part I The Internal Audit activities role in
    Governance, Risk, and Control
  • Part II Conducting the internal audit engagement
  • Part III Business Analysis and Information
    Technology
  • Part IV Business Management Skills
  • Number of questions (per part) 100 multiple
    choice questions
  • Test Time (per part) 2 hours and 45 minutes
  • Exam format Computer Based Testing (CBT)
  • Exam date location Schedule it online and take
    it a Pearson VUE testing centers
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