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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

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)
  • 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

Internal Auditing
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.

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

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
  • 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.

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

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

Risks to the organization
Source Auditing Assurance Services, TJ Louwers
et al, 2006.
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

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

Types of audit assignments
  • Financial (procurement, payables, sales,
    receivables, fixed assets, inventory, payroll,
  • 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)

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
  • Networking opportunities
  • High visibility
  • Great opportunities (often promoted to management
    level positions more quickly than other
  • Transferable skills/disciplines
  • Interpersonal skills
  • Team work
  • Leadership
  • Good pay and reasonable hours
  • Satisfaction that your work leads to improvement
    of the organization

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!

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
  • Start in accounting, corporate finance, IT or
    operations, then transition into an Internal
    Audit position

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
  • Chief Audit Executive 10 years
  • Responsible for internal audit function in a
    regional location or for entire company

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.)

The Institute of Internal Auditors (IIA)

  • 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.)

IIA-Northern California East Bay Chapter
  • http//
  • 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
  • Leadership for Auditors The Power of Listening
  • Preparing for IT Attack
  • Chief Executive Auditor panel discussion
  • Fraud seminar

IIA-Northern California East Bay Chapter (NCEB)
IIA-Northern California East Bay Chapter (NCEB)
  • http// /

  • 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.

  • 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
  • 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