Even if the auditor does a great job of planning, conduct, analysis, and follow-up, the real value of the audit will be absent if the recommendations miss the mark. Audit planning should be focused on two main objectives: identify the risk and design an audit program that will assess the risk. Risk affects the achievement of organizational goals and objectives. Capitalizing on positive risks will increase the achievement of these…
When I am asked, “What does an internal auditor do?” my response is usually, “How much time do you have for me to answer that question?” As a long time internal auditor (35 years), I have often been disappointed by the perception of management (and others) regarding the purpose and value of internal audit. Ask management about internal audit and their response if usually that audit reviews financial statement and…
My understanding is that SAP user roles are difficult to design properly, and the review of user authorizations and access rights is equally challenging. I thought that I could use analytics to identify instances where a user had performed transactions that constituted a potential separation of duties (SOD) issues in the FI component and support management in their reviews to identify roles that were not designed properly. The analysis utilized…
Here are my top eight best practices for creating better internal audit reports that hit the mark: Audit Objective: ensure that the audit objective addresses the risks to the goals and objectives of the organization. It should drive the risk identification and assessment; and be a foundation for the audit workplan and the conduct of the audit. And ultimately, is it the statement upon which the audit concludes. Audit Workplan:…
This is the next post in a series that discusses the importance of having a proper audit objective, defining the business goals and objectives, and the risks to the achievement of those objectives. This article will discuss the identification and assessment of risk. The next series of articles will look at the audit finding statement: Criteria, Condition, Cause, Impact and Recommendation. The focus will be on the use of data…
Study after study has shown that data analytics is effective and efficient at detecting risk and identifying control weaknesses, non-compliance, and inefficient business processes. Chief Financial Officers (CFOs) and Chief Audit Executives (CAEs) have repeatedly stated that data analysis expertise is a much-needed skill, and surveys by the ACFE and CPA firms over the past 10 to 15 years have rated data extraction, data analysis, and analytical software as critical…
It feels odd to have to continue to justify the need for and use of analytics. What can I add that has not already been stated many times over the past 20-30 years? Studies since the early 1990’s have pointed to the need for businesses and auditors to embrace the use of analytics. More recently, Deloitte’s 2021 Global Risk Management Study1 recognizes the potential for digital risk management technology to…
The Risk-Base Audit Plan (RBAP) is an important output of Internal Audit. Not only is it a requirement of the IIA standards, but it also focuses audit on the most significant risks affecting the organization. In addition, it gives the Chief Audit Executives (CAEs) everything they needed to determine which audits will be performed and when; and to identify the required audit resources. However, developing a robust RBAP is not…
For years I have been thinking about Risk, Controls, Black Swans and Entropy; and more recently about Analytics and RPA. Only recently did I understand how these are all connected and impact large and small organizations – particularly in activities that are high-risk and strictly controlled. Sadly, these tightly controlled areas are often overlooked until it is too late. Which bring us to Risk and Controls. Risk and Controls: Business…
As the principle author of the Institute of Internal Auditors (IIA) Global Technology Audit Guide (GTAG) on Continuous Auditing (GTAG#3), I hope that you will grant me the prerogative to state that “Continuous Auditing is Dead”. Continuous Auditing – a misnomer as it should have been called ‘Continual’ Auditing – was never fully understood or accepted by auditors or by audit clients. The idea behind Continuous Auditing was to improve…