Internal Audit Quality (Hardcover)

Preface xiii

Acknowledgments xix

PART I INTERNAL AUDIT AND QUALITY

CHAPTER 1 The Various Faces of Internal Audit 3

History 3

The Institute of Internal Auditors 4

Types of Internal Audit Functions 5

Internal Auditing in Different Sectors and Organizations 5

Internal Audit Standards 8

Conclusion 11

References 11

CHAPTER 2 Quality, Performance, and Value 13

Understanding Quality, Performance, and Value 13

Quality Management Systems: Deming, Juran, and TQM 14

Models for Measuring Performance 18

Conclusion 21

References 21

PART II DEVELOPING THE QUALITY ASSURANCE AND IMPROVEMENT PROGRAM

CHAPTER 3 Developing a Quality Framework 25

The Link between Quality, Performance, and Value 25

Drivers of Quality 26

A Structured Approach to Quality 30

Developing Performance Measures for Internal Audit 32

Responsibility for Internal Audit Quality 37

Creating a Quality Assurance and Improvement Program 41

Reporting on Quality 43

Questions about the Quality Framework 44

Conclusion 45

References 45

CHAPTER 4 Internally Assessing Quality 47

Ongoing Internal Monitoring and Maturity Models 47

Processes for Embedding Quality 51

Periodic Internal Assessments: Health Checks 53

Client Satisfaction 56

Benchmarking the Internal Audit Function 57

Questions about Internal Assessments 59

Conclusion 60

References 60

CHAPTER 5 Externally Assessing Quality 61

What Is an External Assessment? 61

Why Have an External Assessment? 62

Types of Assessments 64

Questions about External Assessments 70

Conclusion 71

References 71

PART III INTERNAL AUDIT GOVERNANCE STRUCTURES

CHAPTER 6 Internal Audit Strategy and Planning 75

Strategic Planning as a Key Input of the Internal Audit Function 75

Vision 78

Internal Audit’s Value Proposition 78

Planning to Deliver Value 85

Assessing Risks Associated with the Internal Audit Function 86

Resource Planning 87

Business Continuity Planning 89

Questions about the Internal Audit Function’s Strategy and Planning Processes 90

Conclusion 92

References 92

CHAPTER 7 Areas of Responsibility and Nature of Work 95

Types of Engagements 95

Assurance 97

Consulting 103

Nature of Work 106

Audit Support Activities 117

Questions about the Internal Audit Function’s Areas of Responsibility and Nature of Work 118

Conclusion 120

References 120

CHAPTER 8 Internal Audit Charter 123

Internal Audit Mandate and Purpose 123

Strategic Context 124

Structure and Position 124

Independence 128

Authority 131

Internal Audit Charter 133

Questions about the Quality of the Internal Audit Charter 135

Conclusion 137

References 137

PART IV INTERNAL AUDIT STAFFING

CHAPTER 9 Internal Audit Staffing 141

Overview of the Staffing Element 142

Capability Planning for the Internal Audit Workforce 142

Flexible Work Practices 149

Recruitment and Retention 151

Service Delivery Models 155

Role of the Chief Audit Executive 163

Questions about the Quality of Internal Audit Staffing Practices 165

Conclusion 167

References 168

CHAPTER 10 Managing and Measuring Staff Performance 169

Professional Attributes 169

Performance Management Processes 172

Team Development 174

Individual Professional Development 177

Professional Membership and Involvement 180

Questions about the Quality of Internal Audit Staff Development Processes 180

Conclusion 183

References 184

PART V INTERNAL AUDIT PROFESSIONAL PRACTICES

CHAPTER 11 Internal Audit Professional Practice 187

Elements of Internal Audit Professional Practice 187

Stages in the Internal Audit Process 190

Internal Audit Policies and Procedures 190

Questions about Internal Audit Policies and Procedures 199

Conclusion 200

References 201

CHAPTER 12 Annual Audit Planning 203

Value-Added Planning 203

Applying an Objectives-Based Approach to Audit Planning 204

Understanding the Organization’s Business 204

Applying a Risk-Based Approach to Audit Planning 205

Auditable Areas and the Audit Universe 211

Assurance Mapping 213

Resource Allocation 217

Annual Audit Plan Formats 219

Communication and Approval 220

Questions about Annual Audit Planning 221

Conclusion 223

References 223

CHAPTER 13 Planning the Engagement 225

Purpose of Engagement Planning 225

Client Engagement 227

Objectives, Criteria, and Scope 229

Environmental Scanning 234

Aligning Engagements to Key Risks 234

Methodology 237

Resourcing and Milestones 244

Assessing Risks to the Audit Engagement 245

Approval of the Engagement Plan 246

Questions about Planning the Engagement 247

Conclusion 248

References 248

CHAPTER 14 Performing the Engagement 249

Audit Evidence 249

Interviews 252

Analyzing Information Collected 255

Engagement Findings 257

Efficient Fieldwork 260

Management and Supervision 260

Working Papers 262

Questions about Performing the Engagement 264

Conclusion 265

References 266

CHAPTER 15 Communication and Influence 267

Understanding Stakeholder Needs 267

Communication versus Influence 271

Engagement Communications 276

Follow-Up 288

Communicating the Acceptance of Risk 290

Questions about Communication and Influence 290

Conclusion 293

References 293

CHAPTER 16 Knowledge Management and Marketing 295

Knowledge Management 295

Marketing 298

Questions about Knowledge Management and Marketing 303

Conclusion 304

References 304

CHAPTER 17 Quality and the Small Audit Shop 305

What Is a Small Audit Shop? 305

Delivering Value in a Small Audit Shop 305

Quality Challenges for Small Audit Shops Related to Governance Structures 307

Quality Challenges for Small Audit Shops Related to Staffing 309

Quality Challenges for Small Audit Shops Related to Professional Practices 311

Conclusion 315

References 315

Appendix A International Standards for the Professional Practice of Internal Auditing 317

Appendix B List of Quality Questions 323

Appendix C List of Key Performance Indicators 345

Glossary 351

About the Author 365

Index 367