A Consultative Approach to Auditing

Presented by:Rachael Moyer

Business Consulting Solutions

Objectives

Internal Audit vs. Consulting IIA Standards for ConsultingWhy Internal Auditors as ConsultantsConsulting Skills for Internal Auditors

Only 45% of 1,800 audit committee members surveyed are satisfied that their company’s Internal Audit function delivers value.

Who are the internal customers?

IA Customers

Audit CommitteeAuditeeSenior ManagementExternal AuditorsRegulators

Internal Audit vs. Consulting

Internal Audit ConsultingFocused on historical data

Focused on future activity

Results in an audit report

Results in recommendations for implementation

Initiated by CAE Initiated by business manager

Results provided to Audit Committee

Results provided to requestor

IIA Standards & Definitions“Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”

IIA Standards for Consulting

1000.C1- The nature of consulting services must be defined in the internal audit charter.

1130.C1 – Internal auditors may provide consulting services relating to operations for which they had previous responsibilities.

1130.C2

IIA Standards for Consulting 1210.C1 – The chief audit executive

must decline the consulting engagement or obtain competent advice and assistance if the internal auditors lack the knowledge, skills, or other competencies needed to perform all or part of the engagement.

1220.C1 – Internal auditors must exercise due professional care during a consulting engagement.

IIA Standards for Consulting

1220.C1 1220.A1Relative complexity and extent of work

Relative complexity and extent of work

Cost/Benefit Cost/BenefitNeeds and expectation of the client Adequacy/Effectiveness

Probability of significant errors

IIA Standards for Consulting

2010.C1 – The chief audit executive should consider accepting proposed consulting engagements based on the engagement’s potential to improve management of risks, add value, and improve the organization’s operations. Accepted engagements must be included in the plan.

IIA Standards for Consulting

2120.C1 2120.C2 2120.C3 – When assisting

management in establishing or improving risk management processes, internal auditors must refrain from assuming any management responsibility by actually managing risks.

IIA Standards for Consulting

2130.C1 – Internal auditors must incorporate knowledge of controls gained from consulting engagements into evaluation of the organization’s control processes.

2201.C1 2210.C1 2210.C2 2220.C1 2220.C2 – During consulting engagements,

internal auditors must address controls consistent with the engagement’s objectives and be alert to significant control issues.

IIA Standards for Consulting 2240.C1

2330.C1 2410.C1 2440.C1 2440.C2 – During consulting

engagements, governance, risk management, and control issues may be identified. Whenever these issues are significant to the organization, they must be communicated to senior management and the board.

2500.C1

Objectives

Internal Audit vs. Consulting IIA Standards for ConsultingWhy Internal Auditors as ConsultantsConsulting Skills for Internal Auditors

Why Internal Auditors as Consultants

56% saw the audit as a routine chore that varied little from year to year.

Just over 60% of the companies said their auditor did not raise any issues or ideas that were used in their business to enhance their processes or decisions.

Why Internal Auditors as Consultants

We know COSO. We know SOX. We’ve performed that same accounts payable audit the same way 3 years in a row with no major audit findings to date. It’s time to infuse our IA department with creativity and ask ourselves, what more can we be doing for our internal customer? How can we perform this audit differently to add greater value?

What Are The Risks?

Risk of Political ExposureProject FailureManagement ExpectationsConflict of InterestMaintaining Independence

and ObjectivityConsulting Assignment

Consulting Skills for Auditors

Include consulting services in annual audit plan/budget

Define and communicate scope early and often

Gain client buy-inDon’t be afraid to say no

Consulting Skills for Auditors

Identify process improvement areas

RVA – Real Value AddedBVA – Business Value AddedNVA – Non-Value Added

6 Tips for a Consultative Approach to Audit

Strive to understand the business on a deeper level

Align resources to critical areas of risk

Develop in-house expertiseBuild trust through

relationshipsOffer something extraSpeak business, not audit

Now It’s Your Turn… Does your internal audit department

offer consulting services? What concerns/questions do you have

that this presentation did not address? What advice can you offer to the person

sitting next to you about internal audit and/or consulting?

What is one thing you learned from today’s presentation or networking?

Contact Information

Rachael@FluxBCS.com512.843.2318

Thank You