MOHAMMAD ALI DADAHEAD OF ASSURANCE – PARTNER COMPANIES

ETIHAD AIRWAYS

INTERNAL AUDITTH€ BU$IN£$$ OF ADDING VALU€13 October 2015

INTERNAL AUDIT – PRIMARY OBJECTIVE

To provide the Board of Directors and the Audit

Committee independent and objective assurance to

allow them to fulfill their role of having oversight

and a monitoring role over the business operations,

and towards enhancing corporate governance,

accountability and achieving business objectives.

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THE FORECASTED FUTURE

So who will survive?

EVOLUTION OF INTERNAL AUDIT

Introduced after the post-war business boom in the US.

Initially transactional, the focus started shifting to controls and compliance

with process.

Coverage started to move from cyclical to risk based projects.

Shift towards regulatory compliance post Enron.

Compliance blended with value added and a more consultative role.

Role moving toward more advisory and business partner. More forward looking.

Requirement to add value now expected.

INTERNAL AUDIT DEFINITION

“Internal auditing is an independent, objective assurance and

consulting activity designed to add value and improve an

organisations operations. It helps an organisation accomplish its

objectives by bringing in systematic, disciplined approach to

evaluate and improve the effectiveness of risk management,

control and governance processes.”

The Institute of Internal Auditors &

The Chartered Institute of Internal Auditors

VALUE IS DEFINED BY BUSINESS, NOT AUDIT

Where does the business most need Audit Support.

Value may be in pure compliance.

Fast growing business may see value in assessment of controls.

Cost improvement reviews.

SUPPORT THE BUSINESS MEET ITS STRATEGIC OBJECTIVES

What is the business all about and what are they trying to achieve?

What could prevent the business from achieving its objectives?

How can we help address that?

DETAILED, PRACTICAL AND WORKABLE RECOMMENDATIONS

High quality issues that have an impact – the ‘So What’ test!

Recommendations that are researched and practical.

A mutually agreed solution developed with the business (ideally!).

FLEXIBILITY TO TAKE ON AD HOC PROJECTS

Blending audit with advisory to support business needs.

Flexibility to respond to business needs, and delivering!

The independence barrier!

DATA ANALYTICAL REVIEWS LEADING TO CONTINUOUS MONITORING

Data analysis may identify concerns the business has not seen.

Convert the test scripts into continuous monitoring tools.

Or develop them for the business as a reporting tool that they never

had.

MEASURABLE ADDED VALUE

“A quantifiable reduction of costs or

increase in revenue as a direct result of

the implementation of an audit

recommendation”

MEASURABLE ADDED VALUE

Departmental KPIs includes measurable added value – by department, team

and individual.

Must be quantified, annualised and agreed with business. Estimate must be

conservative.

Included in the Report Executive Summary.

Reported to the Audit Committee.

Tracking by Corporate Value Add Initiatives

MEASURABLE ADDED VALUE – TRACKING AND REPORTING

Business

Unit

Audit Report

Reference

Observation

Number

Summary Value /Benefit Credit

Business Unit Total

Consolidated Total

Target USD xxx

Actual to Date USD xxx

Remaining USD xxx

Percentage Achieved xx,xx%

MEASURABLE ADDED VALUE – KEY AUDIT AREAS

Airport ancillary revenue – excess baggage, extra legroom, upgrades

Catering wastage analysis

Crew costs – accommodation, transportation and per diems

Aircraft parking costs

Aircraft de-icing costs

Passenger welfare costs

MEASURABLE ADDED VALUE – KEY AUDIT AREAS

Overtime costs

Inventory management – unrecorded stock, surplus spares,

AOG costs

Accounts payable – unused advance payments, duplicate payments,

Optimisation of overflying costs

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