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
