Adding Value Across the Board INTERNAL AUDITING: Adding Value Across the Board

What is Internal Auditing? Internal auditing is an independent, objective assurance and consulting activity that adds value to and improves an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Internal Auditors’ Roles Risk management, control, & governance processes Financial analysts Risk evaluators Improving operations Supplying analyses, suggestions, & recommendations Adding Value

A Valuable Resource… Internal auditing is a valuable resource to executive management and the board of directors in accomplishing overall goals and objectives, as well as strengthening internal control and governance.

Risk Management Internal auditors identify all auditable activities and relevant risk factors, and assess their significance. Investigating Evaluating Identifying potential trouble spots Communicating Anticipating emerging issues Identifying opportunities

Internal Controls Evaluate efficiency & effectiveness of controls Recommend new controls where needed – or discontinuing unnecessary controls Use of control frameworks (COSO, CoCo, Cadbury) Control self-assessment Provide education on risks and controls

Governance Internal auditing provides assurance to management and the audit committee that risks are understood and managed properly.

Communications Keeping senior management aware of critical issues Ensuring factual communications of financial and other data Suggestions based on knowledge of operations throughout the organization

Analyzing Operations Internal auditors: Review operations, policies, and procedures Help ensure goals and objectives are met Understanding of “big picture” and diverse operations Make recommendations to improve economy and efficiency

Reviewing Compliance Ensure management’s policies and procedures are followed Analyze impact of changes in procedures Assure compliance with laws & regulations Review objectives for adherence to organization’s mission, culture, & climate Provide insight to the impact of noncompliance

Assuring Safeguards Evaluate procedures to safeguard assets Technological safeguards Emerging issues

An Audit Committee Resource… Internal audit is the primary resource of the audit committee in carrying out its duties and responsibilities. With those responsibilities increasing and continued pressure from the SEC for financial reporting integrity, a functioning partnership of the audit committee and internal audit is vital. -BellSouth Corporation

An Audit Committee Resource… Internal audit’s relationship to the audit committee is important to assure there are no organizational levels below the board of directors that could prevent necessary actions or appropriate decisions from taking place or being made to enhance business opportunities and mitigate risks. - Asea Brown Boveri

An Audit Committee Resource… An active and informed audit committee provides the ultimate independent and objective oversight of the corporate control environment, including focus on emerging trends and risks. Internal auditing is the primary agent of the audit committee within the company. - Ford Motor Company

A Broad Perspective… Examining global issues Assessing quality, economy, & efficiency Providing accurate and timely communication Evaluating emerging technologies Analyzing opportunities

Essential Services Internal auditing reviews the reliability and integrity of information, compliance with policies and regulations, the safeguarding of assets, the economical and efficient use of resources, and established operational goals and objectives. Internal audits encompass financial activities and operations including systems, production, engineering, marketing, and human resources.  Can you afford to be without it?

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