dubai, uae 6-9 march 2014 - interniaudit.cz
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globaliia.org
Agenda - Tuesday
• Opening Remarks P. Sobel
• Expanding the Umbrella of the IIA D. Beran
• Tuesday Discussion Topics:
• Reassessing IPPF L. Harrington
• Membership Value Proposition H. Silverman
• Feedback Forum and
Closing Session P. Sobel
Open Evening
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Agenda
• Expanded Service Project Overview
• Timelines/Actions Taken Since Global
Council
• What We Have Learned from Recent Study
• Discussion Points
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EXPANDED SERVICES
PROJECT OVERVIEW
• Goal B of Global Strategic Plan
The IIA will deliver the value that compels current,
future and former internal auditors to be members
(Membership/Value Proposition)
• Strategy B3
Address the needs of different sectors within the
internal audit or related professional activities.
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Objective
Objective
Identify and recommend potential options on how best to
implement Strategy B.3 – Address the needs of different sectors
within the internal audit or related professional activities, while
ensuring that The IIA also fulfills its core mission of providing
dynamic leadership for the global profession of internal auditing.
Phase 1
Address the disciplines in the 2nd line of defense (LOD) of the
Three Lines of Defense Model, which are most aligned to The
IIA’s current constituents – Risk Management, Compliance,
Internal Control
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Timeline –
Prior to Global Council 2013
Strategy Refresh Mtg. –Addressing the Needs of Diff. Sectors
• Oct. 2012
BOD Mtg. – Proceed with Further Analysis
• Nov. 2012
Global Council –High Priority for Additional Analysis
• Feb. 2013
Do Nothing Was Not An OptionMove Forward with Additional Analysis
8
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Timeline –
Global Council 2013 – July 2013
EC Mtg. – Approved $150k Initial Invest
March 2013
• Oct. 2012
3-Phased Approach –Market Research, Concept Plan, Business Plan
• April 2013
AssessedCompetitive Landscape
• July 2013
Identified and reviewed 160+ organizations serving disciplines in the 2nd LOD. Determined
that additional research was needed to further understand IA ‘S current and future
involvement in 2nd LOD
EC Mtg. –Approved Approach – IA’ s Current & Future Role in 2nd LOD
• July 2013
9
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Timeline – Current State
Assessing Roles of IA in 2nd LOD Study
• Aug 2013-March 2014
Global Council & EC Mtg. Input
• March 2014
Recommendation to BOD
• July 2014
Understand the current and future roles of IA as it relates to risk
management, internal control & compliance
This Week
10
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Purpose Survey
Purpose of the Survey
Understand current and future roles of internal audit as
it relates to risk management, internal control and
compliance.
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Expanded Role Survey
Preliminary Results17 February 2014
January – March 2014• Private and Publicly
Traded Companies• 17 Countries• 6 Languages
500 Responses to 17 FEB• 90% IA
• 74% CAE • 95% Members
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Expanded Role Survey
Preliminary Results17 February 2014
Industry %
Manufacturing 18%
Energy &
Resources
12%
Financial
Services
10%
Retail &
Entertainment
9%
Healthcare 4%
Technology 4%
Logistics 3%
Other 3%
PRIMARY INDUSTRY
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Expanded Services Survey
Preliminary Results17 February 2014
Revenue
Less than US $10M 7%
US $10M - US $ 50M 5%
US $50M – US $100M 5%
US $100M - US $500M 12%
US $500M - US $1B 14%
US $1B – US $10B 38%
US $10B+ 19%
Annual Revenue
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Initial Observations
• IA often has an extended role, but usually not
with primary lead responsibility
• IA faces broadly similar challenges across all
three disciplines (risk management, internal
control, compliance)
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Opportunity
Challenges in Carrying Out IA’s
Responsibilities (RM, IC, Compliance)
Respondents Sited On Average
Insufficient Experience & Expertise of Staff
- 64% Extremely/Somewhat Challenging
Insufficient Staff Professional Development
- 56% Extremely/Somewhat Challenging
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Initial Observations
• IA often has an extended role, but usually not
with primary lead responsibility
• IA faces broadly similar challenges across all
three disciplines (risk management, internal
control, compliance)
• Professionals are interested in subject matter
on each area
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High Degree of Confidence in The IIAMuch More Likely to Rely on IIA for Information
IIA
AcctgAssoc
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Initial Observations
• IA often has an extended role, but usually not
with primary lead responsibility
• IA faces broadly similar challenges across all
three disciplines (risk management, internal
control, compliance)
• Professionals are interested in subject matter
on each area
• Increased responsibilities are on the horizon
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• 13,000+ CRMAs• Demand of CRMA being an indicator for risk management
assurance content
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43% ARE INCREASING THEIR AMOUNT OF EFFORT TO ASSESSING THEIR
ORGANIZATIONS RISK MANAGEMENT EFFECTIVENESS
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44% OF RESPONDENTS INDICATED THAT THEY WERE RECRUITING/BUILDING RISK MANAGEMENT SKILLS FOR THEIR AUDIT
DEPARTMENTS
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SUMMARY
• IA’s Role is Expanding in 2nd LoD Disciplines
• Challenge with Insufficient Expertise and
Professional Development
• Demand for Leading Practices,
Benchmarking, Evaluation Tools and
Standards/Guidance.
• Risk Management Potentially Greatest
Opportunity
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Discussion Topic 3:Reassessing the IPPF
Larry Harrington, Vice Chair – Professional Practices
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Drivers
• Regulatory influence
• Local guidance
• Industry specific requirements
• Standards too easy/too hard
• Minimum requirements or aspirational
• Maturity scale
• Forms of guidance, speed to market
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Objectives
• Consider the evolving role of internal audit globally
• Consider the impact of elevating stakeholder
expectations
• Propose updates to the structure of the IPPF that will
encompass existing and developing global and local
guidance to meet the needs of the profession for the
foreseeable future
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Scope
• Definition of Internal Auditing
• Foundational principles
• Direct linkage between standards and guidance
• Need to accommodate
– Industry specific guidance
– Regulations
– Local guidance
• Consideration of maturity models
• Enforcement of Standards
– Conform or explain
• Guidance development responsibilities
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Key Players
• Steering Committee
• Taskforce – global team of IA leaders:• 5 United States
• 4 Europe
• 1 Africa
• 1 Australia
• 1 South America
• 1 Japan
• Project support from Ernst & Young
– Global Internal Audit Leader actively engaged
• IIA Staff Support
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Progress to Date
• November 1-2, 2013 Taskforce meeting in Chicago
– Conceptual framework identified
– Taskforce to develop new Definition recommendations
established
• February 6-7, 2014 Taskforce meeting in Dallas
– New definition drafted, minor work remaining
– Conceptual framework modified, refinement continues
– Principles of Internal Audit Effectiveness developed,
mapping of Standards to Principles in process
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Proposed New Definition
• Current Definition:
– 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. (45 words)
• Proposed Definition:
– Internal auditing is an objective assurance activity that
benefits an organization by providing independent
evaluations, advice, and insight on governance, risk
management and internal control. (25 words)
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Proposed Framework
Definition of Internal Auditing
Principles and Attributes of Internal Audit Effectiveness
CODE
OF
ETHICS
International Standards for the Professional Practice of Internal Auditing
(The Standards)
Interpretations to Support The Standards
Implementation Guidance
Supplemental Guidance
REQUIRED
RECOMMENDED
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Proposed Framework
Definition of Internal Auditing
Principles and Attributes of Internal Audit Effectiveness
CODE
OF
ETHICS
International Standards for the Professional Practice of Internal Auditing(The Standards)
Interpretations to Support The Standards
Implementation Guidance
Supplemental Guidance
REQUIRED
RECOMMENDED
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Principles of Internal Audit
Effectiveness
• 12 Principles:
– 3 about the individual
– 6 about the function
– 3 about the outputs/outcomes from the function
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Principles of Internal Audit
Effectiveness1. Demonstrates uncompromised integrity.
2. Is objective in mind-set and approach.
3. Demonstrates commitment to ensuring competency of the entire internal audit activity.
4. Is appropriately positioned within the organization with sufficient organizational
authority.
5. Is aligned strategically with the aims and goals of the enterprise.
6. Is sufficiently resourced to evaluate all significant risks.
7. Is committed to quality and continuous improvement within the internal audit activity.
8. Is efficient and effective in execution of all activities.
9. Is effective in communicating.
10.Provides reliable assurance to those charged with governance over the enterprise.
11.Is proactive, anticipatory and future-focused.
12.Enables positive change.
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Timeline
• At its most aggressive …
– Anticipate seeking Board approval for exposure of
proposed framework at International Conference in July
– Receive and address exposure comments in second half
of 2014
– Final Board approval of new framework in December
2014
– Population of new framework in 2015
– New framework released January 2016
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We Would Like Your Input
• Discussion questions in the Background Paper:
1. What is the current adoption rate of the Standards in your
area of the world?
2. What, if anything, is preventing adoption by practitioners of
the Standards, as well as the entire IPPF, in your country?
3. What are the strengths and weaknesses of the current
IPPF structure?
4. Are you aware of any areas where government agencies
have regulated, codified, or adopted any part of the IPPF
into regulation, statute or law?
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We Would Like Your Input
• Discussion questions in the Background Paper:
5. Are you aware of specific guidance that has been
published that goes beyond the Standards or the IPPF that
impact how internal auditing is to be conducted?
6. Based on your experience, are those charged with
governance knowledgeable of the Standards?
7. If the Definition of Internal Audit and/or the structure of the
IPPF were changed, how much of an impact, if any, would
that create in your country?
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We Would Like Your Input
• As well, any reactions you have to the “work-in-
process”:
– Definition
– Framework
– Principles
• Additionally, if your Institute is publishing local
guidance, please share that with your table facilitator
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Discussion Topic 4:Membership Value Proposition
Harold Silverman, Vice-Chair, Global Services
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Background
• Relevant IIA’s Global Strategic Plan – Goal B
The IIA will deliver the value that compels current, future, and
former internal auditors to be members.
• Initiatives so far:
– Alternative Member Servicing Models to support new or struggling
Institutes, launched in 2014
– The “Umbrella Project” to address the needs of related professionals in the
field of risk management, control, and governance, first discussed at Global
Council 2013. A study is underway to better understand the current state of
affairs.
• To date, The IIA has never undertaken a worldwide initiative to
specifically focus on the value proposition of membership.
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2014 Global Council
Discussions Focus
• Whether all Institutes are meeting the needs of internal audit
professionals and what gaps may exist.
• What programs and services should be implemented to support
and strengthen small and newer Institutes.
• Whether service delivery and membership benefits models in place
are maximizing Institutes’ ability to recruit and retain members.
• Whether additional opportunities exist to better serve the needs of:
– Specific sectors within the internal audit activity.
– Internal audit professionals who rotate out of the profession.
– The student population.
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Discussion Questions
1. What strategies does your Institute use to recruit and retain
members? Please explain if these strategies have been
effective or not.
2. What programs and services, if any, should The IIA develop to
support small and newer Institutes? What role, if any, should the
mature Institutes and regional organization play?
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Discussion Questions
3. What is your biggest challenge regarding membership
recruitment and retention?
4. If inability to offer value-added and tangible services is ranked
high, please explain the reasons.
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Discussion Questions
5. What key strategies, if any, should The IIA use to help:
– Increase the membership value proposition on a global
basis?
– Grow membership on a global basis?
– Diversify membership on a global basis?
6. On a global basis, what is the most important strategy The IIA
should focus on?
7. To support a global strategy regarding membership, do you see
the value of all Institutes participating in coordinated
membership recruitment, retention, and/or diversification efforts?
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INTERNAL AUDIT
LEADERSHIP PROGRAM
Francis Nicholson, Managing Director of Certifications & Global
Strategic Initiatives
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Question Answer – things we know
What is it? A new program focusing on leadership capabilities as applied
specifically to CAEs, in the key areas of:
• Leading the audit function
• Influencing strategy and organizational performance
• Providing opinion and insight
• Advocating innovation and change
• Promoting ethics and social responsibility
Who is it for? Primary audience:
• Route 1: Aspiring future CAEs
Secondary audience:
• Route 2: Long serving CAEs [credit given for experience]
• Route 3: New CAEs
What are the entry
requirements?
Varies with route:
• Route 1: CIA + five years internal audit
• Route 2: 15 years management including three as CAE
• Route 3: 15 years management, now engaged as CAE
Inte
rnal audit leaders
hip
pro
gra
m
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Question Answer – things we know
How is it assessed? Assessing knowledge, understanding and behavior:
• Three written exams of between 3-4 hours each
• Presentation to a panel followed by questions
• 90-minute panel interview
Who’s on the
panel?
Experienced CAEs who have completed the new program
In what countries? • Exams will be available on-line globally
• Assessment for presentations and interviews will be
available face to face and via WebEx
In what languages? English only at launch with no immediate plans to translate to
other languages (but longer term, subject to demand)
When will it be
available?
Announced July 2014
First exams Autumn 2014
First presentation and interviews December 2014Inte
rnal audit leaders
hip
pro
gra
m
globaliia.org
Question Answer – not yet known
What is it called? • Clear, unambiguous and readily understood globally
• Reflect its uniqueness AND its place within the suite
• Will be abbreviated to a set of initials as a short-form title
and as designatory letters (like CIA, CRMA, CFSA etc)
The name will include:
• ONE of the following:
o “Certification”, OR
o “Certified”, OR
o “Qualification”, OR
o “Qualified”
• EITHER “Audit” OR “Internal Audit”
• EITHER “Leadership” OR “Leader”
What is the fee? • Delivery costs are significantly higher than the CIA
• Costs vary according to volumes and delivery models
• Fee must reflect the value Inte
rnal audit leaders
hip
pro
gra
m
globaliia.org
Agenda - Wednesday
Tour (for delegates and guests) of Old City Dubai
Lunch
Leave hotel by bus at 8.30
Return to hotel by 16.15
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