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An introduction to Internal Auditing (The institute of Internal Auditors,…
An introduction to Internal Auditing
Internal Auditing
Organisation and goverments
Seeking quality assurance
Global corporate scandals
Improved governance
Risk management
Control processes
Internal Auditors
Perfect Partners
Right-hand of management
Assuring Policies , Plans and Procedures
Consulting Role
The History of Auditing
Detailed system
Checks and countercheck
First system of verification
Concerns
Errors made in recording
Fraudulent activities
Minimize errors
Need for control
Authorisation of verification
Control Activities - "Auditus"
Concept of Internal Auditing
Accounting records compared to supporting documents
Written records scrutinised
Receive Public accounts ,scrutinise and verify balances are correct
Factors contributing to development of Internal Auditing within organisations
Expanded control
Subjective reporting line managers
Owner or manager removed
Technical expertise
Complexity transactions
Eyes and Ears of field
Increasing transactions
The institute of Internal Auditors
Profession evolved
Established in the USA
Purpose of the institute
Articles
Library
Practice and methods
Social
Standards
Furtherance
Knowledge
The institute of internal Auditors timeline of significant events
2002:The Second King Report on Corporate governance was issued by the institute of directors in south africa , recommending the establishment of an effective internal activity
2002:The corporate of Enron and WorldCom uncovered in USA, Sarbanes-Oxley Act (SOX) was passed to try and prevent such events in the future.This act put a spotlight on internal control and along with it the demand for internal auditors grew
1999:The Public Finance Management Act (PFMA) was promulgated requiring all south african sector organisations to establish an effective internal audit activity
2003:The municipal Finance Management Act (MFMA) was promulgated for local government in SA requiring the establishment of an effective internal audit activity
1992:The committee of sponsoring organisations (COSO) Report (COSO 1 -Internal control:Integrated Framework)
2004:COSO Public published second Report COSO II-Entrepreneur Risk Management Intergrated Framework)incorporating the new focus area for internal auditors namely risk management
1973:The certified Internal Auditor (CIA) programme was establised
2005:The South African Treasury issued Treasury Regulations for departments ,trading entities,constitutional institutions and public entities in terms of the PFMA providing detailed guidance on the establishment and functioning of the internal audit activity
2009:The third King Report on governance was issued by the institute of directors in South Africa ,providing comprehensive guidance on the role and responsibilities of internal auditing , within both private and public sector organisations
2013:COSO published revised framework of internal control ,generally referred to as the COSO III replacing COSOII
2015:The composition of IPPF was revised
2016:The Fourth King Report on Corporate Governance was issued by the institute of Directors in SA emphasising the role and responsibilities of an effective risk-based internal audit
The institute of Internal Auditors Today
Vision
That internal audit professionals will be universally recognised as indispensable to effective governance,risk manangement and control
Goals
Leading voice
Collaborate globally expand capacity
Profile Demand and indispensable resource
Financial and business models generate sustainable value
Lead knowledge
Core Purpose
To lead the global profession and advance its value
The institute of Internal Auditors South Africa
Affiliated with the IAA-Global
Objectives of the IIA-SA
Professional advice and guidance
Technical products
Networking events
Quality assessment services
International benchmarking
Courses,seminars and conference
Technical support
accreditation
certification
Learnership programmes
Five principles of The King Report III
Internal auditing should provide a written assessment of the effectiveness of the company's system of internal audit
Internal auditing should follow risk based approach to its internal audit plan
The board should ensure that there is an effective risk based internal audit activity
Definition o internal auditing
it helps organisation accomplish its objectives by bringing a systematic,discipline approach to
evaluate and improve the effectiveness of risk management ,control and governance processes
Designed to add value and improve an orgarnisation's operations
an independent ,objective assurance and consulting activity
Comparison of the previous and current definitions of Internal Auditing
Previous
Assist members of the organisation
the effective discharge of their responsibility
Established within a organisation
promotes effective control at reasonable cost
Current
consulting activity
Objective acting
The international proffessional practice
Types of Guidance
Recommendation Guidance
Supplemental guidance
previous practice guides
Implementation guidance
old practice advision
Mandatory Guidance
the definitions of Internal auditing
The codes of ethics
the core principle of internal auditing
The standards
quality services
attribute standards and performance
minimum requirements
Legislation and Codes
Public finance management act (PFMA)
in 2002 the first king report was amended an improved second version was issued
Municipal Finance Management
sarbanes-Oxley Act
Companies Act (refers to the king report
Mission of Internal Auditing
To enhance and protect organisational value by providing risk-based and objective assurance,advice, and insight
practitioners should leverage the framework
its place in the new IPPF is delibarate
core principle for the proffesional practice of internal audit
aligns with the strategic, objectives,and risk of the organisation
provide risk-based assurance
is objective and free from undue influence
insightful,proactive,and future-focused promotes organisational improvement
Demonstrates competence and due profesional care
Demonstration intergrity
Summary of the standards
Attribute standards
1000-purpose,Authority and Responsibility
1100- Independence and Objectivity
1200-Proficiency and DPC(due proficiency care)
1300-QAIP(quality assurance and improvement programme
Performance Standards
2100-Nature of work
2200-Planning the audit,
2000- Managing the IAA
2300 -performing the audit
2500-monitoring results
2400-communicating results
Code of ethics
culture-characteristics and knowledge of a particular group of people
code of ethic was established to promote an ethical culture throughout internal audit profession
ethics -moral principles that govern a person"s behaviour
the code applies all internal auditors registered as members with IIA who perform internal audit services
International standards for the professional practices of internal auditing
Purpose:
establishes the basis for the evaluation of internal audit performance
provide framework for preforming and promoting a broad range of value -added IAA
describe basic principles that represent the practice on IA as it should be
foster improved organisational processes and operations
standards are the minimum requirements which are internationally applicable at organisational and individual levels and provide a framework for performing and promoting internal auditing
Role of internal auditors in the business environment
risk management processes
internal conrolprocesses
Effective IAA - at centre of report to highest level of authority. Most IAA have multi-skilled and multi-qualified team members. Why IAA? To assist management with ,amongst others
safeguardingorganisation's assets
providing reliable financial information
improving systems,procedures and process
governance processes
refer to definition of internal auditing ;assist management with reaching organisational objectives provide reasonable assurance on adequacy andeffectiveness of organisation's;
assurance services
policies and procedures are adhered to
are controls mitigation the risks?
consulting services
IC training
advice to mgt
assisting in development and drafting policies
participating in quality teams