IIA Annual Seminar 2012 Aligning Internal Audit to deliver value 9 August

PwC Agenda Slide 2 9 August 2012 Aligning internal audit to deliver value The rising importance of risk management Stakeholder expectations of internal audit Rising to the new floor What this means for your business Questions

The rising importance of risk management

PwCSlide 4 The rising importance of risk management In todays’s ever-shifting risk landscape, internal audit can’t settle for simply reacting to events; instead, it must adopt a strategic mindset that is responsive to risks and helps ready organizations for new threats and opportunities 9 August 2012 Aligning internal audit to deliver value

PwC The 15 most cited risks Slide 5 9 August 2012 Aligning internal audit to deliver value

PwC How well organizations manage each of these risks Slide 6 9 August 2012 Aligning internal audit to deliver value

PwC Least and most well-managed risks by industry groups Slide 7 9 August 2012 Aligning internal audit to deliver value

PwC Importance of internal audit’s contribution to monitoring each risk Slide 8 9 August 2012 Aligning internal audit to deliver value

Stakeholder expectations of internal audit

PwC Stakeholder expectations of internal audit Slide 10 9 August 2012 Aligning internal audit to deliver value As the risk landscape shifts rapidly, CAEs and stakeholders must work to stay aligned both on the impact of this risk to their organization and on the specifics of the role internal audit should play.

PwC Risks that receive too little attention from internal audit Slide 11 9 August 2012 Aligning internal audit to deliver value

PwC Risk areas in which stakeholders and CAEs want/plan to add internal audit capabilities Slide 12 9 August 2012 Aligning internal audit to deliver value

PwC Three lines of defense Slide 13 9 August 2012 Aligning internal audit to deliver value

Rising to the new floor

PwC Rising to the new floor 15 Risks have shifted and expectations have risen, and all internal audit functions need to rise to this new floor; providing assurance on a broader range of critical risks Slide 15 9 August 2012 Aligning internal audit to deliver value

PwC Rising to the new floor Slide 16 9 August 2012 Aligning internal audit to deliver value

PwC Meet the challenge of a higher floor Think and act strategically Leverage the second line of defense Align resource allocations Understand the business Leverage specialists Deliver advice and best practices Build trust through ongoing dialogue Simplify reporting, make it consumable Connect the dots Slide 17 9 August 2012 Aligning internal audit to deliver value

What this means for your business

PwC Internal audit functions need to meet higher expectations, as the floor has risen Align the scope of work and allocation of resources to the organization’s most critical risks through comprehensive, top-down risk assessments Hold ongoing, robust dialogues with stakeholders Leverage and coordinate with the organization’s other risk management and compliance functions Lend expertise to enable the organization to enhance its second line of defense if it is not already robust Provide stakeholders advice on risk s and controls that improve business performance Communicate complex matters in a clear, consumable fashion, with summaries of recurring themes and deeper, interpersonal interaction with stakeholders Slide 19 9 August 2012 Aligning internal audit to deliver value

PwC Internal audit functions need to meet higher expectations, as the floor has risen Ensuring stakeholder sponsorship on the importance of the CAE role and positioning the function Ongoing dialogue stakeholders with a mindset of enabling the business to function better Face the talent and resource shortage challenge head on With the risk landscape shifting under their feet, internal audit functions must follow the same path, transforming and strengthening the floor form which they operate and becoming the partner stakeholders increasingly want and expect Slide 20 9 August 2012 Aligning internal audit to deliver value

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