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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Internal Audit Standards: Everything for Everybody

  Inta Ozolina

  …15 Internal Audit Standards: Everything for Everybody? By Inta Ozolina, Internal auditor (ACCA, CIA) The applicability and scope of IAI… …Standards has been an object of discussion for some time now. One of the issues of these discussions is – whether all companies should apply the Standards… …Practice Advisories provide further interpretation of the general statements of the Standards. Of course, the mentioned documents are only for guidance… …the management and owners? I do not think so. Does it make the compliance for smaller audit teams very hard if not impossible to obtain? Yes, it does… …initiate modification of Standards for smaller companies to motivate and promote the quality of work of all internal auditors irrespective on the size of…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Performance Measurement and Controlling of Internal Audit – More Than Just a Measurement Problem

  Dr. Andreas Langer, Andreas Herzig, Prof. Dr. Burkhard Pedell

  …, Prof. Dr. Burkhard Pedell72 Internal audit must face the challenge of measuring, documenting and communicat- ing its added value. For this purpose… …. The acceptance of quality assessments has not been very well developed so far and the indicators only allow limited statements to be made about the… …added value of internal audit. Therefore, clear and transparent criteria should be used as a basis for the selection of indicators; relevance, reactivity… …should be based on a solid scientific foundation. 1 Introduction Notwithstanding increasing regulatory requirements for functioning and effective… …generated with these are in an economically beneficial proportion to one another. So far, an exten- sive methodological debate regarding the controlling of… …communicating this performance has not yet always succeeded convincingly in the past. The requirement for intensive analytical research and a stronger dialogue… …demonstrates the required development and outlines perspectives for performance measurement and controlling of internal audit. 2 Necessity of Planning and… …appropri- ate information for planning and controlling its target contribution, which portrays its own performance and makes it controllable on this basis… …extensively in the literature (cf. Gleich (2001), Klingebiel (2001), Ittner et. al. (2003)). In con- trast, the debate regarding concrete concepts for… …performance measurement and controlling, which is adapted to the service performed by internal audit, has only taken place to a very minor extent so far (this…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Efficient Risk Management in Leasing Companies

  Prof. Dr. Fikret Hadžiæ, Amir Softiæ

  …recession, leasing markets recorded a further decrease of more then 60 %, until the number of signed contracts for the same period decreased by 40 %.20… …leasing subject (movable or fixed property) and gives it to the lease recipient to use for a certain period of time with the lease recipient being obliged… …effi- cient asset for the acquisition of required production and other equipment, as well as the property necessary for performing business activities… …. It is especially conven- ient for small and medium-sized businesses that, quite often, do not have an access to commercial bank loans. Also, leasing… …(fikret.hadzic@efsa.unsa.ba); Amir Softić, dipl.oec is a member of ASA Finance d.d. man- agement, and is responsible for risk management (amir.softic@asa.ba). 20 See… …www.leasing.org.ba; www.banka.hr; www.poslovni.hr - accessed on 21 March 2010. 21 www.leaseurope.org – accessed on 21 March 2010. Hadžić and Softić 28 for… …civilian purposes which boosts domestic consumption, and thus creates condi- tions for more dynamic economic development. Because of its developing function… …existence of a secondary market for leasing sub- ject redemption, evidently brings leasing houses closer to the primary function and way of working of… …monitoring. Since 2009 all leasing companies in the Federation of B&H transferred to the su- pervision system of Agency for Federation of B&H banking. In… …the first quarter of 2010, the Agency started issuing work permits to leasing houses. The legal frame- work for the companies in the Federation of B&H…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Company Culture is Worth the Cost

  Sergey Martynov

  …employees associate the achievement of their personal objectives, for the next two or three years, with the achievement of the company objectives. Fur… …if it is not included in financial reports, and helps to generate value for a company: it should therefore be audited, just like all other company… …main threat for a company’s business. For example, a number of studies show that company losses caused by employee disloyalty are three times greater… …asset of an organisation. For example, if we decided one day to change our employees and hire new staff from other entities, the company would continue… …guaranteeing success and in the effi- ciency of a business, for various reasons. Firstly, it results in increased employee loyalty towards the company. A… …approach to work and active participation in carrying out control procedures. If employees are moti- vated and understand the need for and importance of… …turnover and the costs of hiring and keeping staff: if there is a low level of company culture, employees are prepared to change jobs even for a small… …deliberately promoted and developed for specific purposes. In any case, company culture within an organisation goes through various stages of devel- opment (see… …beliefs, come from various different entities. In these situations it is extremely im- portant for the management to make an effort to rapidly develop a new… …can be positive, but the process of establishing a com- pany culture by example may take a long time. It is extremely important, however, for the…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Governance Works, in Principle

  Neil Baker

  …and general corporates was lead- ing to the “self-enforcement” of a compliance culture. There were already far too many rules for regulators to monitor… …must lay the foundation for reform to help to en- sure that a global crisis, such as this one, does not happen again,” their end of sum- mit communiqué… …said. There was little detail about how they would actually achieve this; more plans are promised for the end of March. But the general point was… …corporate governance in the financial sector. There was much talk about the need for banks to improve their modelling and their risk management practices… …needs to be fixed? 1 Wrong Question? The Financial Reporting Council, which is responsible for the Code, says not. Its chief executive, Paul Boyle… …practice of it… The focus should be on whether the existing standards have been observed in practice.” The Code, for example, says that a company’s board… …training and guidance for non- executives. 2 Non-Executive Failure? The UK’s corporate governance system is hinged on the effectiveness of nonexecu- tive… …directors. They are meant to perform the role that Walter Bagehot described for the monarchy: to be consulted, to encourage and to warn. But too often, they… …non-executives improve. They called for clearer selection criteria, so that better directors are appointed in the first place. They wanted them to get more… …training. And they suggested some quick fixes, such as holding informal meetings outside the confines of the traditional boardroom – to make it easier for…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Continuous Auditing: Myth and Reality

  Adrian Garrido

  …our function for over twenty years, though it is not clear when it will form part of the present. Summary 1: Although Continuous Auditing is a… …set of automated methods used for performing audit activities on a more frequent basis. This definition is ___________________ 70 Adrián Garrido… …represented the future of our function for over twenty years though it is not clear when it will form part of the present. – Secondly, there is much… …happens with so many theoretical models, the answer lies in the difficulty for im- plementation. In short, our companies are too big and complex to think… …of projects, with perhaps an added diffi- culty for justifying a relevant investment in resources for something that does not have a particularly… …Internal Audit has been applying Continuous Auditing techniques for many years within the Branch Network and currently there is a considerably mature model… …on-line with the branches in order to request supporting documentation and to clarify the reasons for the root of the alert. The objective of this system… …those indicators and finally the design of clear procedures for communication and resolution of problems. 5 Five Dangerous Ideas But even for those… …areas. Is this possible or this approaches should be left only for certain processes or activities? To answer this question I have identified five… …realistic objective except for very punctual areas. The audit cycle approach will still continue being valid for some time and the target would rather be…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Doing More with Less

  Neil Baker

  …, I would probably be angry,” he says. “But I’ve been in the profession for a long time, and I’ve experienced this kind of downsizing in other… …to be the case for most audit functions – how can heads of internal audit rework their plans so they continue to deliver assurance and value with… …“We examined the audit plan for 2009 and considered how we would accomplish our objectives with two fewer staff members,” Storms says. They eventually… …. The head of internal audit should ask the committee what areas it wants to priori- tise, he says. “It’s easy for chief audit executives to start by… …department should focus. Ask them: ‘What should we be doing for you?’” Reigning in expectations in this way is impor- tant, Chambers says. In many instances… …greatest value for resources expended. “Any audit function taking that approach must be fully transparent in its audit reports about the level of coverage… …involve a difficult balancing act. For example, heads of internal audit often report to two masters: the finance chief, who sets the audit budget, and the… …audit committee, which receives the assurance that this budget pays for. What if the audit committee wants the same level of assurance but the finance… …department wants to cut the budget? “If the chief financial officer has decided that the audit function should be reduced, it is vital for the audit com-… …Report: 2009 Hot Topics for the Internal Audit Profession – showed how auditors around the world are refocus- ing their audit efforts to reflect a…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  International Professional Practices Framework – Overview of the current guidance of the Institute of Internal Auditors

  T. Flemming Ruud, Philipp Friebe, Daniela Schmitz, Shqiponja Isufi

  …Internationalen Grundlagen für die berufliche Praxis der Internen Revi- sion 2009” (The international fundamentals for the professional practice of Internal Audit… …established itself as the struc- tural basis for the activities of the Internal Audit. It is a self-contained framework which is recognized internationally by… …various regulatory authorities.2 For example, in Switzerland the Swiss Financial Market Supervisory Authority (FINMA) refers to the guidance of the IIA.3… …As a consequence, the Internal Audit profession faced higher expectations and new challenges, which increased the need for rules and guidelines for… …for developing and reviewing the individual elements of the framework. The aim of this review was to create more clarity as to the mandatory nature of… …: www.treuhaender.ch. 2 Cf. The IIA’s Vision for the Future Task Force (2007), p. 3, Bantleon/Unmuth (2008), p. 106 and Baker (2009), p. 56. 3 Cf… …Cf. The IIA’s Vision for the Future Task Force (2007), p. 3 and Baker (2009), p. 54. Ruud, Friebe, Schmitz, Isufi 18 elements, and to ensure… …important changes to the Standards are introduced and finally, the conclusion evaluates the changed framework and gives an outlook for the future… …suitable for the new concept and were removed.6 Meanwhile Position Pa- pers and Practice Guides were added to the framework. Figure 1 shows the ele- ments of… …IIA’s Vision for the Future Task Force (2007), p. 2. 7 All of the elements of the IPPF are available to members of the IIA on http://www.theiia.org…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Contribution by Internal Audit to IT Compliance

  Thomas Lohre

  …into a competitive factor, which makes a crucial contribution to the implementation of corporate strategies. Furthermore, it ac- counts for a… …considerable portion of the costs and investments and the legal and regula- tory requirements for IT have also grown significantly.31 Corporate Governance is… …a concept originating from Anglo-American vocabulary32 and has, since then, been used for the debate regarding proper business management… …translation into German has not taken place so far. As Becker/Ulrich correctly note, the concept has its origin in Latin and is derived from the term… …national principles for good and responsible business management, which applies to the employees, as well as the management of companies. Corporate… …rules, they are a country- specific understanding of responsible business management.33 An important mile- stone for Germany was the adoption of the DCGK… …“compliance with relevant laws and regulations”. The COSO Framework is also regarded as the relevant framework for the fulfilment of the requirements of… …Section 404 of the Sarbanes-Oxley Act. 34 See DCGK (2007). For the effects of the German Corporate Governance Code on the finan- cial statement audit… …different bundles of measures result from this defini- tion. On the one hand, measures to ensure legal conduct and, on the other hand, measures for early… …protection, IT security, le- gally compliant archiving and legally compliant IT implementation. Even if a comparable legal regulation does not exist for…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  The Financial Sector: Risks, Controls and Assurance after the Financial Crisis

  Daniel Nelson

  …boom in good credit conditions, combined or feeding into an increased appetite for risks and for leveraging. All of this was accompanied by a rapid… …sheet entities to facilitate rapid growth and to generate fee incomes: when the crisis started unfolding the risks or responsibility for these… …off-balance sheet entities came starkly back. We today know investors’ search for yield undermined their due diligence. ___________________ 71 The… …management. Nelson 94 For what concerns the underlying policies causes, three examples can be made. Ba- sically, the regulatory and supervisory… …role for the most part, not integrated with the business lines. Risk-assessments were excessively model-driven, with less reliance on historical data… …financial crisis was the need for better coordination among the major economies. As a consequence, one of the first steps was to increase the meetings among… …capital for its operations as would have been the case with a lower credit rating. On September 16, 2008 AIG lost its AA- rating (it had already lost… …its AAA rating in 2005), and that triggered its trading partners to suddenly ask AIG for billions of dollars more in collateral—but AIG didn’t have… …the money. On September 16, the Federal Reserve extended an USD 85 billion credit to AIG in exchange for about 80 % of the ownership of the company… …internal audit. 4 Lessons for Internal Auditors First of all it has been reported that internal audit did not have sufficient or adequate access to…

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