Planning and programming for sustained effective use of internal audit

resources

Rob Newsome African Regional Director

Overview

- The need to understand what is subject to audit

- Understand the objectives of the Ministry

- Using risk to position the audit work- Co-ordinating with other assurance

providers- Skilling up the internal audit department

Audit Universe

Delivery against Political Promise

Public service

Vendors/Suppliers

Contractors

Sub-contractors

Distributors

Other governmentdepartments

AncillaryComplimentaryServices

TradeUnions

Landlords

Strategic Management Processes

External Forces & Agents

Resource Management Processes

Road construction

Road maintenance

Building services

Asset protectionAnd control

Individuals

Road users

Not for profitInstitutions

Government

CommercialEntities

Core Business Processes

Business ProcessesMarkets Alliances Core Products Customers

Planning and budgeting

Logistics and Contractor management(Supply Chain)

Customer Service Delivery

Human Resource Management

Financial/Treasury Management

Regulatory Management

Property Management

Information Management

Local Politics

International PoliticsRegulatorsWorld Bank Financing Customers

Suppliers

Natural Disasters Civill Strife

Economy

Technology

Capital Markets

Strategy to risk link

Visionand

Strategy

“To succeedfinancially, howshould weappear to ourshareholders?”

Obj

ectiv

es

Targ

ets

Mea

sure

s

Initi

ativ

es

FINANCIAL

“To achieve ourvision, howshould weappear to ourcustomers?”

Obj

ectiv

es

Targ

ets

Mea

sure

s

Initi

ativ

es

CUSTOMER

“To satisfy ourshareholdersand customers,what businessprocesses mustwe excel at?”

Obj

ectiv

es

Targ

ets

Mea

sure

s

Initi

ativ

es

INTERNAL BUSINESS PROCESS

“To achieve ourvision, how willwe sustain ourability tochange andimprove?”

Obj

ectiv

es

Targ

ets

Mea

sure

s

Initi

ativ

es

LEARNING AND GROWTH

Benchmarking

Risks which threaten objectives

Controls linked to risks

Accidents Monitor compliance with safety standards and policies & procedures

Lack and timing of resources

Monitor compliance with logistics plan

Equipment break-downs Monitor compliance with maintenance plan

Labour disruptions Human Resources management

Wasted expenditure Budgeting and financial disciplines

Assurance co-ordination

Assurance Areas

Focus Timing Assurance Provider

Cash risk Independently evaluate your process to ensure that the key controls in place adhere to sound cash management principles

March September

Management / Internal Audit

External audit review

Strategic Staff planning, productivity, succession, competency, performance, capacity, staff morale, mentorship

June Management

Plant maintenance

Maintenance expenditure control

May Management

Human Resource Management

Recruitment February Management

Internal Audit expectations

To support the Board of Directors, Audit Committee and management in identifying and managing risks and thereby enabling them to achieve corporate objectives. This is achieved by:

Enhancing the understanding of risk management and the underlying concepts and assisting to implement an effective risk process; and

Providing objective feedback on the quality of organisational controls and performance.

Internal Audit resources needed for…

Risk management ,and Providing objective feedback

Risk Management Resources

Chief Risk Officer vs. Chief of Internal Audit

Providing objective feedback on the process of risk management

Risk management software to maintain the risk data base

Assurance Resources

Determine which risks Internal Audit should provide assurance on

Group the risks within logical processes to detemine effective audit coverage

For each audit identified consider the resources needed to complete the review

Assurance Resources continued…

Use software for data interrogation and audit working papers

Assess the skill levels needed to complete each audit

Determine the hours of each skill level to complete the specific tasks

Per skill level aggregregate the estimated hours

Obtain view of the total resource needed to complete the audit universe

Assurance Resources continued…

Agree with management and the Audit Committee on the annual cycle to cover the audit universe

The man plan of the department therefore has a zero base

Determine the optimal level and specialist staffing mix inclusive of skills that may be outsourced

This optimal man plan becomes the profile to recruit, train and provide career development

Assurance Resources continued…

Benchmark the plan against international and other relevant measures to ensure that the investment is within acceptable norms

Develop acceptable measures to report on department utilisation of resources

Closing comments

Audit efficiency and effectiveness through using CAATs

Establish monetary and time budgets for each review and measure actual performance

This approach is being adopted in the public sector. What needs

to be done to make it operational in your

organisation???