How do you balance the assurance and consulting roles of internal audit in relation to management control?
Internal audit is a key function that supports management control by providing independent and objective assurance and consulting services. However, balancing these two roles can be challenging, especially in a dynamic and complex environment. How do you ensure that your internal audit activities add value, align with the organization's objectives, and meet the expectations of various stakeholders? Here are some tips to help you achieve this balance.
Before you start any internal audit engagement, you need to clearly define your scope and objectives. This will help you determine the appropriate level of assurance and consulting that you can provide, as well as the risks, issues, and opportunities that you need to address. You should also communicate your scope and objectives to the management, the audit committee, and other relevant parties, and obtain their agreement and support.
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The key is to understand the difference between assurance and consulting activities. IIA's definition of Internal auditing states that it is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. - Assurance provides assessment of an organization's risk management, internal control and governance processes and is past-focused. The scope is determined by the internal auditor after performing necessary risk-assessments. WHEREAS - Consulting provides advice, recommendations and guidance to improve an organization's risk management, internal controls and governance processes and is future-focused. The scope is determined in collaboration with the client.
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The internal auditor has both an assurance and consulting role. The assurance role provides independent and objective assessments of processes, systems, and controls to ensure they are operating effectively and in compliance with established policies and procedures. Its main focus is valuing historical performance and identifying areas for improvement. On the other hand, the consulting role aims to add value and improve the organization's operations by providing advice, recommendations, and solutions to management. Consultants collaborate with management to enhance processes and achieve organizational objectives. The focus is mostly on current and future challenges. All said and done, there should be a balance in roles. Follow for more.
As an internal auditor, you should follow the standards and best practices that guide your profession, such as the International Standards for the Professional Practice of Internal Auditing (IPPF) and the Code of Ethics. These will help you maintain your independence, objectivity, competence, and quality in your assurance and consulting roles. You should also keep yourself updated on the latest developments and trends in your industry, sector, and domain, and apply them to your internal audit work.
One of the challenges of balancing the assurance and consulting roles of internal audit is to adapt to the changing needs and expectations of the organization and its stakeholders. You should be proactive and flexible in responding to the emerging risks, opportunities, and demands that may affect your internal audit plan, scope, and approach. You should also seek feedback and input from the management, the audit committee, and other stakeholders on your internal audit performance, value, and impact.
Another way to balance the assurance and consulting roles of internal audit is to collaborate and coordinate with other assurance providers, such as external auditors, regulators, compliance officers, risk managers, and internal control specialists. By doing so, you can leverage their expertise, insights, and resources, avoid duplication and gaps, and enhance the overall assurance and consulting coverage and quality. You should also establish clear roles, responsibilities, and expectations with these assurance providers, and share relevant information and findings with them.
Finally, to balance the assurance and consulting roles of internal audit, you need to develop and maintain trust and rapport with the management, the audit committee, and other stakeholders. You can do this by demonstrating your professionalism, credibility, integrity, and value in your internal audit work. You should also communicate effectively and timely with them, listen to their concerns and suggestions, and provide them with constructive and actionable recommendations.
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Internal audit is predominately an assurance function. When internal audit resources are constrained, the primary focus must be on assurance work to prioritize commitments made in the audit plan and emphasize what the board and audit committee expect. However, if internal audit functions are not flexible, proactive, and visible in their organizations they will become less and less relevant over time. Advisory services/projects are highly effective means to address the dangers of losing that relevance. The mission of internal audit should be about assurance, advice and insight. Providing all three in the right measure will ensure internal audit can and will continue to add value as organizations evolve.
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Balancing internal audit roles is key! 🌐 1️⃣ Define Clearly: Set audit scopes and objectives, aligning with management and committees for support. 2️⃣ Stick to Standards: Follow IPPF and Code of Ethics for quality and independence in your roles. 3️⃣ Be Adaptable: Stay flexible to evolving needs, seeking feedback for enhanced performance. 4️⃣ Collaborate: Team up with external auditors and regulators for broader coverage. 5️⃣ Build Trust: Demonstrate professionalism, integrity, and value to foster trust with stakeholders. 6️⃣ Stay Tech-Savvy: Embrace technology for impactful insights and continuous improvement.
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