Internal Audit Experts Perform Internal Audit Quality Assessments

C-Suite Executives and boards are increasing their expectations of Internal Audit

Your internal audit department plays a critical role in corporate governance. It provides insights to your management and board as to strategic, financial, operational and compliance risks across the organization. It assesses how well processes and controls are working and provide recommendations for improvement. Independence and objectivity are foundational attributes that their success is built upon.

Today’s senior leaders and Boards are looking to their audit functions to deliver increasing levels of insights into organizational performance and then add value through recommending improvements which help drive strategic success. Given this environment of increasing expectations, it’s in everyone’s best interest to have a robust, effective internal audit function.

Internal audit functions must comply with professional standards

As with other professions, your internal audit team is required to comply with various standards of performance. In this case, the Institute of Internal Auditors has established the International Standards for the Professional Practice of Internal Auditing (theStandards). These Standards address how the audit function should be staffed and managed, how it executes its work, the expectations of audit quality, and how it engages with the organization, among other important aspects.

One Standard that doesn’t always get the emphasis it deserves states, “The chief audit executive must develop and maintain a quality assurance and improvement program (QAIP) that covers all aspects of the internal audit activity.” An effective QAIP contains several essential elements which include:

  • Broad scope encompassing all aspects of the internal audit activity
  • An assessment of compliance with IIA Standards and Code of Ethics
  • A candid evaluation of the internal audit’s efficiency and effectiveness
  • Detailed list of areas for improvement
  • Engagement with the company’s Board of Directions in oversight of QAIP implementation

Once the QAIP program is established and executed, the department must be assessed for effectiveness. This can be done by a current or former member of the audit function who is knowledgeable of the IIA Standards or an external professional. Opportunities for improvement are then identified and acted on. The results should then be communicated the CAE’s manager and other senior leaders, and ideally the Audit Committee of the Board, if one has been established.

The Standards also state, “External assessments must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organization.” This assessment is called a Quality Assurance Review, or QAR. Audit functions must execute on the QAIP and QAR requirements in order to state that their work complies with professional standards. Can your internal audit function make this assertion?

If the answer is a qualified yes or possibly a no, look no further than the team at NAFA.

Experienced audit professionals can help you drive audit quality

At NAFA, we have a team of experienced CAEs and audit professionals who have worked in publicly traded companies with global operations, as well as Big-4 public accounting firms. They have developed QAIP programs from the ground up, established KPIs to measure performance, and conducted objective assessments of internal audit functions. They have led audit departments ranging from small teams of three to mid-sized departments of 27 professionals in US and foreign locations. One former CAE has been trained by the IIA in conducting external QARs and has over 30 years of internal audit experience. When it comes to assessing and driving audit quality, our team has seen it and done it in their careers and stands ready to share their knowledge with your internal audit team by helping you with the following:

Meeting the QAIP Standard

  • Pointing out the essential elements that comprise a Quality Assurance & Improvement Program
  • Developing tools and methods to aggregate relevant information related to audit quality
  • Advising you on conducting an initial QAIP assessment
  • Sharing best practices of modern internal audit departments which bolster the management and leadership of internal audit functions
  • Advising you on how to share your strengths and opportunities with your management and board

Meeting the QAR Standard

  • Helping you prepare for an external QAR by conducting a quick dry run of the essential elements
  • Performing the QAR as an independent, objective assessor

Yes, expectations of internal audit continue to rise in terms of quality and complexity of services. You want your team to excel and meet stakeholder expectations while complying with professional standards, and we can help you do that. As your chief audit executive (CAE) drives the audit function up the maturity curve, sky’s the limit as to their sphere of influence in your organization.

Contact North American Forensic Accounting for reliable internal audit quality assessments

North American Forensic Accounting has certified internal audit experts ready to assess your internal audit processes. To learn more, call us at 347-286-4860 or contact one of our offices online to schedule an appointment. NAFA serves clients from offices throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay Area.