The Role of Internal Audit in Enhancing Control and Performance

1
The Role of Internal Audit in Enhancing Control
and Performance
2
Contents
The Role of IA in enhancing control and
performance Aug 2005

• Managements role in control and performance
• Internal Audits role in enhancing control and
  performance
• A case study in auditing Governance processes
  with the objective of enhancing control and
  performance

3
The Role of IA in enhancing control and
performance Aug 2005
Managements role
Design and implement processes to achieve
objectives
Objective
Process
4
The Role of IA in enhancing control and
performance Aug 2005
Risk not achieving objectives
Risk
Objective
Process
5
The Role of IA in enhancing control and
performance Aug 2005
Control to minimize risks
Risk
Objective
Control
Process
6
The Role of IA in enhancing control and
performance Aug 2005
Continuous improvement
Risk
Objective
Control
Process
Improvement
7
The Role of IA in enhancing control and
performance Aug 2005
Control Environment
Risk
Objective
Control
Process
Improvement
8
The Role of IA in enhancing control and
performance Aug 2005
Control Environment
Risk
Objective
Control
Process
Improvement
Compliance Performance
9
The Role of IA in enhancing control and
performance Aug 2005
Internal Audit
Independent Objective
Assurance Consulting
Activity Add
Value
Improve Operations
Evaluate and improve the effectiveness of
governance, risk management and control processes.
10
Governance process
The Role of IA in enhancing control and
performance Aug 2005
What is governance processes? Why do IA audit
governance processes? When do IA audit
governance processes? How do IA audit governance
processes?
11
The Role of IA in enhancing control and
performance Aug 2005
What is governance processes?
Strategic/operational plan
Core responsibilities

Human resources
Financial budget
Performance agreement
Capital budget
Performance measurement
KPIs/ Exception reports
12
The Role of IA in enhancing control and
performance Aug 2005
Why do IA audit governance processes?
PFMA and IIA requirements
13
The Role of IA in enhancing control and
performance Aug 2005
When do IA audit governance processes?
14
The Role of IA in enhancing control and
performance Aug 2005
How do IA audit governance processes?

• Identify the principles of good governance
• Governance IA Report.doc
• Develop an assessment tool kit for each
  principle
• Compile an assessment report
• Use the assessment report as basis for
  improvement

15
The Role of IA in enhancing control and
performance Aug 2005
The principles of good governance

•           Code of Conduct
•           Disciplinary processes
•           Functional planning and performance
  management
•           Workload management
•           Implementation of audit report
  recommendations
•           Budgeting and financial planning
•           Strategic plans risk assessment
•           Organogram and structure
•           Human resource recruitment
•           Human resource training and
  development
•           Roles, responsibilities and job
  descriptions
•           Performance evaluation and skills
  development
•           Risk management structured and
  integrated approach
•           Information management - quality and
  flow
•           Assets - physical safeguard and
  control
•           Information technology risk
  assessment

(Example)
16
The Role of IA in enhancing control and
performance Aug 2005
Audit report recommendations
Regulatory mandate
17
The Role of IA in enhancing control and
performance Aug 2005
Audit report recommendations

• Best Practice Guidelines
• Senior Management needs to agree with the
  findings and recommendations for implementation
  and improvement
• The findings and recommendations need to be
  tabled before the audit committee
• The recommendations need to be prioritised from
  high risk to low risk
• Each recommendation needs to be allocated to a
  responsible official for implementation
•  

18
The Role of IA in enhancing control and
performance Aug 2005
Audit report recommendations

•   Best Practice Guidelines (continue)
• The method of implementation and the scope of the
  improvements needs to be defined and
  implementation timelines set
• A reporting system needs to be established to
  report on implementation progress for each
  recommendation to both senior management and the
  audit committee
• The benefits of the implementation of the audit
  recommendations must be evaluated and or
  quantified so that senior management and the
  audit committee can measure the reduction in risk
  to the entity
•  

19
The Role of IA in enhancing control and
performance Aug 2005
Assessment toolkit audit report recommendations
20
The Role of IA in enhancing control and
performance Aug 2005
Assessment toolkit audit report recommendations
21
The Role of IA in enhancing control and
performance Aug 2005
Assessment report

• Rating based on assessment toolkit
• Prioritised areas for managements attention

22
The Role of IA in enhancing control and
performance Aug 2005
THANK YOU! Riaan van Niekerk 083 290
4671 rvn_at_eybfn.co.za