Preface xiii Acknowledgments xix PART I INTERNAL AUDIT AND QUALITY CHAPTER 1 The Various Faces of Internal Audit 3 History 3 The Institute of Internal Auditors 4 Types of Internal Audit Functions 5 Internal Auditing in Different Sectors and Organizations 5 Internal Audit Standards 8 Conclusion 11 References 11 CHAPTER 2 Quality, Performance, and Value 13 Understanding Quality, Performance, and Value 13 Quality Management Systems: Deming, Juran, and TQM 14 Models for Measuring Performance 18 Conclusion 21 References 21 PART II DEVELOPING THE QUALITY ASSURANCE AND IMPROVEMENT PROGRAM CHAPTER 3 Developing a Quality Framework 25 The Link between Quality, Performance, and Value 25 Drivers of Quality 26 A Structured Approach to Quality 30 Developing Performance Measures for Internal Audit 32 Responsibility for Internal Audit Quality 37 Creating a Quality Assurance and Improvement Program 41 Reporting on Quality 43 Questions about the Quality Framework 44 Conclusion 45 References 45 CHAPTER 4 Internally Assessing Quality 47 Ongoing Internal Monitoring and Maturity Models 47 Processes for Embedding Quality 51 Periodic Internal Assessments: Health Checks 53 Client Satisfaction 56 Benchmarking the Internal Audit Function 57 Questions about Internal Assessments 59 Conclusion 60 References 60 CHAPTER 5 Externally Assessing Quality 61 What Is an External Assessment? 61 Why Have an External Assessment? 62 Types of Assessments 64 Questions about External Assessments 70 Conclusion 71 References 71 PART III INTERNAL AUDIT GOVERNANCE STRUCTURES CHAPTER 6 Internal Audit Strategy and Planning 75 Strategic Planning as a Key Input of the Internal Audit Function 75 Vision 78 Internal Audit?s Value Proposition 78 Planning to Deliver Value 85 Assessing Risks Associated with the Internal Audit Function 86 Resource Planning 87 Business Continuity Planning 89 Questions about the Internal Audit Function?s Strategy and Planning Processes 90 Conclusion 92 References 92 CHAPTER 7 Areas of Responsibility and Nature of Work 95 Types of Engagements 95 Assurance 97 Consulting 103 Nature of Work 106 Audit Support Activities 117 Questions about the Internal Audit Function?s Areas of Responsibility and Nature of Work 118 Conclusion 120 References 120 CHAPTER 8 Internal Audit Charter 123 Internal Audit Mandate and Purpose 123 Strategic Context 124 Structure and Position 124 Independence 128 Authority 131 Internal Audit Charter 133 Questions about the Quality of the Internal Audit Charter 135 Conclusion 137 References 137 PART IV INTERNAL AUDIT STAFFING CHAPTER 9 Internal Audit Staffing 141 Overview of the Staffing Element 142 Capability Planning for the Internal Audit Workforce 142 Flexible Work Practices 149 Recruitment and Retention 151 Service Delivery Models 155 Role of the Chief Audit Executive 163 Questions about the Quality of Internal Audit Staffing Practices 165 Conclusion 167 References 168 CHAPTER 10 Managing and Measuring Staff Performance 169 Professional Attributes 169 Performance Management Processes 172 Team Development 174 Individual Professional Development 177 Professional Membership and Involvement 180 Questions about the Quality of Internal Audit Staff Development Processes 180 Conclusion 183 References 184 PART V INTERNAL AUDIT PROFESSIONAL PRACTICES CHAPTER 11 Internal Audit Professional Practice 187 Elements of Internal Audit Professional Practice 187 Stages in the Internal Audit Process 190 Internal Audit Policies and Procedures 190 Questions about Internal Audit Policies and Procedures 199 Conclusion 200 References 201 CHAPTER 12 Annual Audit Planning 203 Value-Added Planning 203 Applying an Objectives-Based Approach to Audit Planning 204 Understanding the Organization?s Business 204 Applying a Risk-Based Approach to Audit Planning 205 Auditable Areas and the Audit Universe 211 Assurance Mapping 213 Resource Allocation 217 Annual Audit Plan Formats 219 Communication and Approval 220 Questions about Annual Audit Planning 221 Conclusion 223 References 223 CHAPTER 13 Planning the Engagement 225 Purpose of Engagement Planning 225 Client Engagement 227 Objectives, Criteria, and Scope 229 Environmental Scanning 234 Aligning Engagements to Key Risks 234 Methodology 237 Resourcing and Milestones 244 Assessing Risks to the Audit Engagement 245 Approval of the Engagement Plan 246 Questions about Planning the Engagement 247 Conclusion 248 References 248 CHAPTER 14 Performing the Engagement 249 Audit Evidence 249 Interviews 252 Analyzing Information Collected 255 Engagement Findings 257 Efficient Fieldwork 260 Management and Supervision 260 Working Papers 262 Questions about Performing the Engagement 264 Conclusion 265 References 266 CHAPTER 15 Communication and Influence 267 Understanding Stakeholder Needs 267 Communication versus Influence 271 Engagement Communications 276 Follow-Up 288 Communicating the Acceptance of Risk 290 Questions about Communication and Influence 290 Conclusion 293 References 293 CHAPTER 16 Knowledge Management and Marketing 295 Knowledge Management 295 Marketing 298 Questions about Knowledge Management and Marketing 303 Conclusion 304 References 304 CHAPTER 17 Quality and the Small Audit Shop 305 What Is a Small Audit Shop? 305 Delivering Value in a Small Audit Shop 305 Quality Challenges for Small Audit Shops Related to Governance Structures 307 Quality Challenges for Small Audit Shops Related to Staffing 309 Quality Challenges for Small Audit Shops Related to Professional Practices 311 Conclusion 315 References 315 Appendix A International Standards for the Professional Practice of Internal Auditing 317 Appendix B List of Quality Questions 323 Appendix C List of Key Performance Indicators 345 Glossary 351 About the Author 365 Index 367
SALLY-ANNE PITT is recognized as a global expert in audit quality. She is the Managing Partner of Pitt Group, a consulting firm specializing in assurance and evaluation services, where her key audit clients include major Australian government departments. Between 2008 and 2012, Sally-Anne oversaw the external quality assessment program for the Institute of Internal Auditors Australia, and she helped author the IIA's 2012 Practice Guide: Quality Assurance and Improvement Program. Sally-Anne has undertaken in excess of 60 external quality assessments of Australian and global organizations from the public, financial, mining, telecommunications, and not-for-profit sectors.