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Internal Audit Quality

Internal Audit Quality Developing a Quality Assurance and Improvement Program

  • Author:
  • Publisher: John Wiley & Sons
  • ISBN: 9781118715512
  • Published In: September 2014
  • Format: Hardback , 400 pages
  • Jurisdiction: International ? Disclaimer:
    Countri(es) stated herein are used as reference only

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    Deliver increased value by embedding quality into internal audit activities

    Internal Audit Quality: Developing a Quality Assurance and Improvement Program is a comprehensive and authoritative guide to better practice internal auditing. Written by a global expert in audit quality, this guide is the first to provide complete coverage of the elements that comprise an effective internal audit quality assurance and improvement program. Readers will find practical solutions for monitoring and measuring internal audit performance drawn from The IIA's International Standards for the Professional Practice of Internal Auditing, and complemented by advice and case studies from leading audit practitioners from five different continents.

    Major corporate and financial collapses over the past decade have challenged the value of internal audit. With an increased focus on internal audit's role in good governance, management is increasingly demanding that internal audit provides assurance of the quality of its own activities. The IIA standards provide a framework for audit quality in the form of mandatory guidance . Recent research indicates that the majority of internal audit functions do not fully comply with the standards and, as a result, are not servicing the needs of their organizations as well as they might.Internal Audit Quality offers a roadmap to internal audit quality, providing readers the guidance they need to:

    • Embed quality into all elements of internal audit from strategic and operational planning down to day-to-day tasks
    • Create well-defined internal audit programs and procedures
    • Independently self-assess internal audit quality and performance
    • Conform with the IIA standards and better practice
    • Provide assurance over internal audit efficiency and effectiveness
    • Deliver value by meeting stakeholder expectations

    As a key component of good governance, internal audit is on the rise. The days of retrospective, compliance-focused auditing is a thing of the past. Organizations expect more of internal audit, and many internal audit activities are accepting the challenge. Rather than relying on audit supervision and external assessments, modern auditors are embedding quality into audit activities to create effective programs. For the auditor looking to distinguish themselves as leading edge, Internal Audit Quality provides the guidance that enables the right work, at the right time, in the right way.

  • 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.

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