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© Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO CHAPTER: @IIACHI | #IIACHI | WWW.FACEBOOK.COM/IIACHICAGO | HTTPS://WWW.LINKEDIN.COM/GROUPS/1123977 1
Building Your Internal Audit Toolkit to Become the Auditor of the FutureJIM HANNANNATIONAL PRACTICE DIRECTOR
IFG FINANCE AND ACCOUNTING AND RISK SOLUTIONS
© Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO CHAPTER: @IIACHI | #IIACHI | WWW.FACEBOOK.COM/IIACHICAGO | HTTPS://WWW.LINKEDIN.COM/GROUPS/1123977 2
RAJ V. NAGARAJAN
SENIOR VICE PRESIDENT – CHIEF AUDIT EXECUTIVE
WINTRUST FINANCIAL CORPORATION
Agenda and Objectives: Building Your Internal Audit Toolkit to Become the Auditor of the Future
What is the Auditor of the Future?
What skills will you need?
How to you build these skills?
Audit Basics – what makes a good auditor?
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Auditor of the Future
Audit Fundamentals
Agile and responsive
Understands Organizational Needs and the
Business
Understands Business Processes
Understands IT systems Uses Technology Communicates
Effectively Innovative
© Institute of Internal Auditors 2019 4CONNECT WITH THE IIA CHICAGO CHAPTER: @IIACHI | #IIACHI | WWW.FACEBOOK.COM/IIACHICAGO | HTTPS://WWW.LINKEDIN.COM/GROUPS/1123977
Creating tools in each of these areas will prepare you for the future of auditing
Audit Fundamentals◦ Understanding the risks and audit objectives◦ Designing and Performing Audit Procedures◦ Gathering the Evidence and Identifying issues◦ Dealing with People:
◦ Being efficient with people’s time◦ Getting information from people
◦ Being organized and good documentation
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Understanding the Risks and Audit Objectives◦ Risks and objectives are the why and what of an audit◦ Audits are planned as the result of a risk assessment◦ The risks identified have been assessed to be a high priority, or
the audit would not have been planned◦ How do we understand the risks?◦ How do the risks relate to the audit objectives?◦ Discussing risks with management and process owners◦ Not everyone may see the risk◦ Dealing with “so what”
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Understanding the risks and objectives will help direct your efforts and keep you focused on the audit objectives
Experience with risks is an essential tool in your toolkit
Designing and Performing Audit Procedures◦ Beginning with the Risks and
Objectives◦ Understanding the Process◦ Understanding the Systems◦ Understand how the risks are
managed◦ Asking the Right Questions◦ What is the population?◦ What is the inverse of the
population?◦ Being creative◦ Using technology
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Gathering the Evidence and Identifying Issues◦ Going beyond audit exceptions◦ Asking the Right Questions, again◦ What is not there that should be?◦ Is there an elephant in the room?◦ Sorting through the noise◦ Seeing the Big Picture◦ Missing the forest for the trees◦ Denial and resistance
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Is that a real bear about to eat this man?
Developing the ability to find and identify issues is an important tool in your toolkit
Dealing with People◦ Coordinating audit work with work schedules◦ De-personalize◦ Developing a relationship with the auditee◦ Getting people to help you◦ Finding allies◦ Interviewing Skills◦ Asking the Right Questions, again◦ The brush-off and hostile auditees
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Not everyone appreciates being audited
Develop relationships with auditees and throughout the organization - Effectiveness in dealing with People can be the difference between an impactful audit and a bust
Communicates Effectively◦ Written Communication◦ Verbal Communication◦ Timely Communication◦ Cutting through the clutter◦ Concision
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Agile and Responsive◦ Agility: the ability to move quickly and easily.◦ Responding to events and changes◦ Doing the work better and faster◦ Measure the audit process – where is time spent and how can time be
reduced◦ Targeted “quick hit” audits◦ Using Technology◦ Using Agile Methodology◦ Requirements and solutions evolve based on need◦ Collaborative and adaptive◦ Rapid and flexible response to changes◦ Adaptive planning, evolutionary development, empirical knowledge, and continual
improvement, and it encourages rapid and flexible response to change
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Developing agile capabilities is a tool that can be applied to many situations to produce results faster
Understanding Organizational Needs◦ What is the organization’s mission and strategy?◦ How does audit adds value?◦ What are the key areas of focus of IA department and
organizational needs?◦ Understanding the audit plan and why
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Linking our activities with the how audit adds value and the organization’s mission and strategy makes us more valuable
Understanding Business Processes◦ How does the business operate?◦ Standard Business Processes – more similarities than
differences◦ Industry Unique Processes◦ Organizationally Unique Processes◦ Best Practices◦ Common Issues◦ Mapping out the Process
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Understanding how Business processes work as well as what can go wrong is an important tool in your kit
Understanding IT Systems
What systems are being used?How and Where do systems store Data?How is data processed by the systems?How do systems link and work together?Understanding RisksCybersecurityCloud Assessments
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Understanding how IT Systems work as well as what can go wrong is an important tool in your kit
Uses Technology◦ GRC Tools◦ Understanding and Getting Data◦ Advanced Excel◦ Data Analytics Tools◦ Predictive Analytics◦ Robotic Process Automation (RPA)◦ Cognitive Intelligence◦ Reporting
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GRC Tools Can support comprehensive view of audit universe
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Data Analytics
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Getting DataKnowing the systems used
Understanding the Data
Getting Access to the Data
Using your relationships
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Advanced Excel• Having advanced Excel skills is extremely useful in internal and
other areas as well• Excel can be used for data analytics by sorting, comparing,
summarizing and filtering data • Become knowledgeable about the many operations on the data
and formulas menus and how to use pivot tables• VLOOKUP, pivot tables, SUMPRODUCT, logical statements such as
IF and writing complex formulas are just a few examples of advanced excel
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Becoming the “Go-To” person to perform advanced excel work makes you extremely valuable is an important tool to add to your kit
Data Analytics ToolsTo perform advanced data analytics, excel has limitations especially when applying complex logic, comparing multiple elements and using very large sets of data
Commonly used data analytics tools include ACL and IDEA
Using these tools, especially ACL, requires some knowledge of programming
Many internal audit departments struggle to effectively use these tools due to the investments required to learn how to use them, write the scripts, obtain the data and then analyze the results
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Knowing how to effectively use these data analytics tools makes you extremely valuable is an important tool to add to your kit
Analyzing DataUnderstanding what you’re looking for
What is the data telling you?
Anomalies
Seeing the signal in the noise
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Knowing how to analyze data will
Predictive AnalyticsPredictive analytics is the branch of the advanced analytics which is used to make predictions about unknown future events.
Predictive analytics uses many techniques from data mining, statistics, modeling, machine learning, and artificial intelligence to analyze current data to make predictions about future.
Using Predictive Analytics in Internal Audit
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Robotics and Cognitive Intelligence
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Robotics process Automation (RPA)Many companies are deploying RPA to automate tasks
RPA is still in its early stages but is expected to grow exponentially
Companies initially struggling with ROI on RPA
Candidates for RPA are repetitive, standardized tasks that take up significant time and are performed on a large scale consistent tasks
Using RPA in Internal Audit
Providing assurance regarding RPA
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Internal Auditors will need to become proficient in RPA software and how RPA is deployed
Machine Learning and Artificial IntelligenceAs is well known, AI is making great strides and machines are capable of performing very advanced functions such as driving a car
AI is still in its early stages
Using AI and machine learning in Internal Audit
Providing assurance regarding AI and machine learning
Data Quality
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Internal Auditors will need to become proficient in how AI is deployed
Innovates◦ Develops new Ways of doing things◦ Uses creative approaches◦ How to foster creativity◦ Finding your voice
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Putting it all Together - Auditor of the Future
Audit Fundamentals
Agile and responsive
Understands Organizational Needs and the
Business
Understands Business Processes
Understands IT systems Uses Technology Communicates
Effectively Innovative
© Institute of Internal Auditors 2019 27CONNECT WITH THE IIA CHICAGO CHAPTER: @IIACHI | #IIACHI | WWW.FACEBOOK.COM/IIACHICAGO | HTTPS://WWW.LINKEDIN.COM/GROUPS/1123977
Creating tools in each of these areas will prepare you for the future of auditing
Agenda: Building Your Internal Audit Toolkit to Become the Auditor of the Future
The Auditor of the Future
Audit Basics
Understanding the Needs of the Organization
How to Equip Yourself to Address the Organization’s Needs
Technology and Audit
Other Areas
© Institute of Internal Auditors 2019 28CONNECT WITH THE IIA CHICAGO CHAPTER: @IIACHI | #IIACHI | WWW.FACEBOOK.COM/IIACHICAGO | HTTPS://WWW.LINKEDIN.COM/GROUPS/1123977
Questions and Answers?END OF PRESENTATION
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Thank you for your time and attention!IIA CHAPTER CHICAGO | 59TH ANNUAL SEMINAR
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