The main roles of IA from assurance to advise PEM PAL IA COP Audit in Practice Working Group The main roles of IA from assurance to advise Dragos Catalin Niculae Skopje The 08th of April 2019

SUMMARY A. Assurance services Definition Implementation Standards Particularities B. Consultancy services C. Comparative analysis

Assurance Services. An objective examination of evidence for the purpose of providing an independent assessment on governance, risk management, and control processes for the organization. (IIA Glossary from INTERNATIONAL STANDARDS FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING )

Assurance Services Attribute Standards Performance Standards 1000 Purpose, Authority, and Responsibility 1110 Organizational Independence 1111 Direct Interaction with the Board 1112 Chief Audit Executive Roles beyond Internal Auditing 1130 Impairment to Independence or Objectivity 1210 Proficiency 1220 Due Professional Care Attribute Standards Performance Standards 2010 Planning 2110 Governance 2120 Risk Management 2130 Control 2201 Planning Considerations 2210 Engagement Objectives 2220 Engagement Scope 2240 Engagement Work Program 2330 Documenting Information 2410 Criteria for Communicating 2440 Disseminating Results 2500 Monitoring Progress

1. Involve the internal auditor’s objective assessment 2. Provide opinions or conclusions regarding an entity, operation, function, process, system, or other subject matters 3. The nature and scope of an assurance engagement are determined by the internal auditor 4. Three parties are involved: a. the process owner (person or group directly involved with the entity, operation, function, process, system, or other subject matter) b. the internal auditor (the person or group making the assessment) c. the user (the person or group using the assessment) Assurance services

Consulting Services. Advisory and related client service activities, the nature and scope of which are agreed with the client, are intended to add value and improve an organization’s governance, risk management, and control processes without the internal auditor assuming management responsibility. (IIA Glossary from INTERNATIONAL STANDARDS FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING )

Consulting Services Attribute Standards Performance Standards 2010 Planning 2120 Risk Management 2130 Control 2201 Planning Considerations 2210 Engagement Objectives 2220 Engagement Scope 2240 Engagement Work Program 2330 Documenting Information 2410 Criteria for Communicating 2440 Disseminating Results 2500 Monitoring Progress Performance Standards 1000 Purpose, Authority, and Responsibility 1130 Impairment to Independence or Objectivity 1210 Proficiency 1220 Due Professional Care

1. Are advisory in nature and are generally performed at the specific request of an engagement client. 2. The nature and scope of the consulting engagement are subject to agreement with the engagement client. 3. Two parties are involved: a. the internal auditor (the person or group offering the advice ) b. the engagement client (the person or group seeking and receiving the advice ) Consulting services

Assurance services Consulting services Specific request of engagement client Trigger factor Internal Auditor assessment Nature and scope Determined by auditor Agreed with engagement client Result Opinions and conclusions Advisory activity and added value Parties 3 2

Romania experience - Consulting service Mioara Diaconescu Director CHUPIA-Romania

Romania experience - Consulting service The IAs are reticent to use this type of engagements Informal consulting missions (not formalized) – especially at the local administration (Fireman method) Meetings Telephone Compartimentele de Audit sunt reticente sa foloseasca acest tip de misiune pt ca apare un paradox. Managerul nu stie ce sa ceara (nu are cunostinte cum sa folosesasca auditul) iar auditorul intern nu stie ce sa livreze nefiindu-I clara solicitarea. Ca sa se evite aceste neclaritati se foloseste cel mai mult consilierea informala. In administratia publica locala in anul 2017-2018 nu s-a formalizat nici o misiune de consiliere. Consilierea s-a facut dar punctual, la telefon, face to face, cu solutii punctuale si imediate. Este ca activitatea unui pomiper, stige focul cand apare insa nu stinge cauza care procduce incendiul

Romania experience - Consulting service Internal Auditors refuse to be involved in the consulting engagements

Romania experience - Consulting service Why? Restrictions for audits - standards Not sufficient knowledge for Internal Auditors; difficulties to find the appropriate solutions De apt

Romania experience - Consulting service Misinterpretation of the standards - not be involved in auditable actions No solutions for management Loss of management trust „We don’t need audit” Audit=control – no solutions for management

the design of systems, elaboration List of questions for Panel discussions The Internal Auditors can be involved in the the design of systems, elaboration of procedures, etc ? 2. Formal versus informal consulting

Thank you for your attention! dragos.niculae@mfinante.gov.ro mioara.diaconescu@mfinante.gov.ro