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Challenges to Establishing an Effective Organisational

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Challenges to Establishing an Effective Organisational Framework for Effective Internal Auditing By Ato Ghartey Skills needs Skills mix Training plan and ... – PowerPoint PPT presentation

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Title: Challenges to Establishing an Effective Organisational


1
Challenges to Establishing an Effective
Organisational Framework for Effective Internal
Auditing
By Ato Ghartey
2
OUTLINE
  • What is a framework?
  • Why does it exist/objectives?
  • The Framework Illustration from Ghana
  • What does it look like?Who should design
    it?Where should it be located?ChallengesEvaluat
    ion criteria and methodologySuccess criteria
    Outcomes and ImpactsTeasing questions
  • Conclusion
  • What does it look like?
  • Who should design it?
  • Where should it be located?
  • Challenges
  • Evaluation criteria and methodology
  • Success criteria Outcomes and Impacts
  • Teasing questions

3
OBJECTIVES OF THE INTERNAL AUDIT Organisational
framework
4
Why Does It Exist / Objectives?
Control environment with integrity,
accountability and transparency.
Strong culture of internal control, risk
management, internal and external auditing
Clear definition of powers and responsibilities
Facilitating coherent system
Transparency, public confidence for rational
allocation of resources.
Add value and improve operations
Priority setting, planning and decision making
Accurate,reliable and timely reporting
5
THE FRAMEWORK
Operational Framework Manual / Legislative Instrument , IIA Framework , Professionals ethics, etc.
Legal Framework
Sector Ministry
Attorney General office
Cabinet
Parliament
Background and Objectives Existing location, Structure and Functions Restructuring and Relocation Staffing and Capacity Building Requirements Resource and Operational Requirements Transition Plan
6
Background
  • Public Financial Management Reform
  • Programme (PUFMARP).
  • Transfer of budgetary authority and
  • expenditure control to MDAs and MMDAs.
  • Formal legal recognition of internal audit

7
THE EXISTING LOCATION (CAGD), STRUCTURE AND
FUNCTIONS
Controller Accountant-General
Head of Audit Investigations Division (Director)
Audit
Investigations
Public Accounts
MDAs
Payroll Audit
Task Force
Pension
Note Questionable mandate, lack of control
overide, duplication of functions.
8
Redesign and Relocation
Using this approach
Understanding and appreciation of
How the whole internal audit system works.How to
identify the component parts, e.g., MDAs,
MMDAsHow each of the components worksHow the
parts fit together as a whole
Functions and processes are brought
togetherSystem implementation is done in a
coherent mannerEach party within the
organisation gets to know his/her role and how
the role links to or affects other parts of the
organisation.
9
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10
PROPOSED STRUCTURE OF THE CENTRAL INTERNAL AUDIT
AGENCY (CIAA)
OFFICE OF THE PRESIDENT OR MINISTRY OF FINANCE
CENTRAL INTERNAL AUDIT BOARD
DIRECTOR GENERAL
DEPUTY DIRECTOR GENERAL (DDG) Technical , Field
Operations Research - MDAs
DEPUTY DIRECTOR GENERAL (DDG) Technical , Field
Operations Research - MMDAs
DEPUTY DIRECTOR GENERAL (DDG) Administration
Human Resource
MDA
MDA
MDA
RAIU
RAIU
RIAU
ABBREVIATIONS DDG Deputy Director
General MDA Ministries, Department and
Agency MMDA Metropolitan, Municipal and
District Assembly RIAU Regional Internal
Audit Unit Also included in the MDA category
are the Armed Forces, Commission on Human Right
and Administrative Justice, National Media
Commission, Serious Fraud Office, electoral
commission and other similar institutions.
MMDA
MMDA
MMDA
MMDA
11
Skills needsSkills mixTraining plan and
sustainability
Staffing and capacity building requirements
Training plan and sustainability
Skills needs
12
  • Transition Plan
  • Implementation committee
  • Legal backing
  • What to do with existing staff, etc.

13
Resource and Operational RequirementsCosting
of operational and logistical inputs
14
LEGAL FRAMEWORKCentral Internal Audit Bill 2002
15
  • Legislative Instrument
  • Manual, e.g. Eastern and Southern Africa
  • IIA Etc. see illustration

Operational Framework
16
Operational Framework an Illustration
17
The Framework
Professional Practices Framework





Code of Ethics
Attribute Standards
-Independance and Objectivity -Proficiency Due
Professional Care -Quality Assurance Compliance
Consulting Services Implementation Standards
Assurance Services Implementation Standards
Performance Standards
Internal Auditing Definition
Internal Auditing Definition
-Managing the Internal Auditing Activity -Nature
of Work -Engagement Planning -Engagement
Performance -ommunicating Results -Monitoring
Progress
Guidance -Practice Advisories
Guidance -Development Practice Aids
18
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19
C
Normal change management expectations
H
A
L
Specific challenges
L
E
N
G
Environmental challenges
E
S
20
  • Normal Change Management Expectations
  • Note Change implies the unknown, uncertainty,
    risk and stress. The status quo represents
    stability, consistency and security. People
    resist change for good reasons which include
  • Communication Not convinced about the need for
    change. Lack of awareness, consensus building and
    participation.
  • Security loss of current job status and known
    work and expertise.
  • Uncertain benefits.
  • Fear of failure.
  • Low tolerance for change.
  • Change implies the unknown, uncertainty, risk and
    stress. The status quo represents stability,
    consistency and security. People resist change
    for good reasons which include
  • Communication Not convinced about the need for
    change. Lack of awareness, consensus building and
    participation.
  • Security loss of current job status and known
    work and expertise.
  • Uncertain benefits.
  • Fear of failure.
  • Low tolerance for change.

21
Specific Challenges
Timing and funding, e.g., estimated start,
November 2001. Implementation of priority
issues, i.e., implementation committee, enactment
of law, appointment of D-G and other key staff
July 2002.
Ownership of internal audit staff
Location Office of President v MOF
22
Rationale of the framework and related issues
Scope and targeting of policy implementation
activities
Environmental Challenges
Legitimacy of framework
Issues and constraints related to implementation
(See below)
23
Implementation issues include
  • Policy rationale need for the framework and
    assurance services
  • Policy implementation and building capacity
    including reporting, HR, strategy, and internal
    audit committees
  • Ignorance, Compliance, Enforcement
  • Professionalism and ethics
  • Governance and poverty reduction dimensions
  • Information Technology Issues in Internal
    Auditing
  • Values and Accountability
  • Mobilizing Support and Structuring Credibility
    for Public Sector Internal Auditing/Building
    Confidence and Trust
  • Building Partnerships and Coalitions for
    Effective Financial Accountability (includes
    outsourcing)
  • Staff recruitment and retention
  • Appropriate classification and salary levels

24
Evaluation Issues
  1. Evaluation Methodology
  2. Outcome, Impact and Success Criteria
  3. Teasing Questions

25
  • Feedback
  • Interviews
  • Survey
  • Case studies
  • Gap analysis
  • Review of relevant documents
  • Benchmarking

Evaluation Methodology
26
Outcome, Impact and Success Criteria
  • Results of the new IA policy activities
  • improved programme delivery, alternatives, and
    unintended effects
  • improved awareness, compliance and enforcement
  • improved governance

27
Teasing Questions
Teasing Questions
  1. To what extent have departmental heads and
    accounting officers bought into the revised IA
    policy and assurance services?
  2. Is there an active IA committee in each
    department and agency providing input to
    departmental priorities, planning, and
    decision-making?
  3. Are management corrective action plans
    followed-up and implemented?
  4. Has a monitoring system been set up and
    implemented?
  5. Is there a continuing need for change in the IA
    function?

28
Teasing Questions contd.
  • To what extent have departments and agencies
    established an effective assurance capability?
  • To what extent will the revised IA policy
    contribute to
  • more effective audit reporting?
  • supporting the management in setting priorities,
    planning and decision- making?
  • fostering a continuous management improvement
    system?
  • improving confidence in the IA function?
  • providing greater transparency in program
    delivery?
  • ensuring accountability of departments and
    government to Parliament and to the citizenry?

29
Teasing Questions contd.
  • To what extent have your capacity building
    initiatives been successful in
  • providing advice to the political leadership,
    departmental heads, the general public, and IA
    practitioners?
  • developing the necessary technical capacity and
    expertise for the country?
  • Improving awareness, compliance and enforcement?

30
Teasing Questions contd.
  • How effective will the IA policy be in
    contributing to improved program delivery of
    departments?
  • How effective will the IA policy be in improved
    governance (including anti corruption) and
    poverty reduction?
  • Are there better ways of delivering the IA
    function within the federal, state and local
    governments?
  • What, if any unintended effects (positive or
    negative) will result in the new IA policy and
    framework
  • Is there an effective monitoring system in place
    for the IA function?

31
Conclusion
Keep abreast with new and emerging ways trends
and ways of doing things. That way we will be
well equipped to solve new problems with
corresponding new approaches. Change of
attitude, skills set and mindset. Change views
on internal audit and look for more innovative
and effective ways of using the resources
associated with it before the full benefits
associated with it can be realized.
32
The End
THANKS
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