1. Auditing the Public Sector: Managing Expectations, Delivering Results
Arthur Piper
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2. CBOK 2015 Practitioner Study
CBOK is the Global Internal Audit Common Body of Knowledge:
The global practitioner survey is the largest ongoing study of internal audit professionals in the world.
More than 25 free reports about practitioners and the profession will be released from July 2015 to July 2016.
Download free reports from the CBOK Resource Exchange at The IIA website at any time (

3. CBOK 2015 Practitioner Survey
Practitioner Survey Results
Survey completed April 1, 2015
14,518 usable survey responses
Participation Levels
100% representation from IIA institutes
Responses from 166 countries
23 languages

4. CBOK 2015 Practitioner Study
Global Regions are based on World Bank Categories. Percentages are the percentage of total survey responses from that region compared to all survey responses.
North America: 19%
Latin America & Caribbean: 14%
Middle East & North Africa: 8%
Sub-Saharan Africa: 6%
Europe & Central Asia: 23%
South Asia: 5%
East Asia & Pacific: 25%

5. CBOK 2015 Practitioner Study
The speaker does not necessarily need to say this, but it’s important to remember that each pie chart is based only on those who answered that particular question (in other words, not all 14,518 survey respondents provided an answer to every question.) Below are the specific number of responses for each question shown on the slide.
Age was obtained from 12,780 respondents; Organization Type was obtained from 13,032 respondents; Gender was obtained from 14,357 respondents; Staff Level was obtained from 12,716 respondents.
Age was obtained from 12,780 respondents; Organization Type was obtained from 13,032 respondents; Gender was obtained from 14,357 respondents; Staff Level was obtained from 12,716 respondents.

6. Low Funding…
Those of us in the public sector have known anecdotally that we are under-funded compared to other parts of the profession. CBOK 2015 Global Practitioner Survey confirms those suspicions in no uncertain terms.
As you can see from this exhibit, in every region across the globe, more public sector auditors say that their budgets are “not at all sufficient” to perform the work they are asked, or required, to do compared with auditors in other sectors. Public sector auditors score 12 percentage points higher in their belief that they are underfunded – or, almost one in four say they are, compared to one in 10 in other industries.
We know that most governments across the globe cut funding to public services in aftermath of the financial crisis of 2007/2008. But the cuts have not fallen equally on all public services in many countries, so the impact on internal audit departments has not been uniform.
Finally, there may be light at the end of the tunnel for some. About one in three respondents in the public sector are now reporting increased to their budgets, with half (52%) saying budgets are static.
Why do these statistics matter?

7. High Expectations Increased scrutiny from the public
Diverse stakeholder base
Divisional management, department heads
The board and/or audit committee
The public and public interest groups
Politicians
Because expectations are increasing.
In many countries, there is increased public scrutiny – backed up in places by additional open access government initiitatives, such as the freedom of information act requests in the UK. Any interested member of the public can ask for, and is entitled to receive information from any branch of government upon payment of a nominal fee
In addition, it is often difficult to pin down and communicate with all of the stakeholders public sector auditors deal with. Not only do public sector auditors have to deal with internal stakeholders – management and the board – but are often more directly accountable to the public and politicians. That can make it difficult to both understand and meet such a diverse, sometimes conflicting, set of needs

8. Threats to Independence and Objectivity
About 1 out of 4 public sector CAEs say they have faced pressure during their careers to alter valid audit findings, with that proportion slightly higher in Sub-Saharan Africa (see exhibit 8). That is just above global averages – but not significantly so
The pressure is most commonly felt from CEOs and operations management, although the board of directors is also involved in some regions (particularly Europe and Latin America) (Q77b, n = 187).
What this tells us is that internal audit in the public sector is not always independent enough of management. One reason that contributes to this unhealthy coziness, is the fact that, relatively speaking, there are fewer audit committees and equivalents in the public sector than there are in other parts of the profession. Just over two in three (67%) say they have such a body, compared with 83% among non-public sector respondents
CAEs must, where possible, lobby for the introduction of audit committees and, where they do exist, ensure that they are well-informed about internal audit’s role and resonsibilities.

9. Action Points: Promoting Independence
Focus on building strong, professional relationships with key stakeholders based on honesty, competence, and reliability.
Seize the opportunity to facilitate a conversation leveraging the Three Lines of Defense Model. Internal audit can take on a consultative and educator role in helping key stakeholders understand the importance of an effective three lines of defense.
It is the CAEs duty and role to educate him or herself about stakeholder needs and educate them about the role and responsibilities of internal audit
[Speak to slides]

10. Evolving Risk Landscape
So, we’ve looked at some of what we might call the internal, or organisational, pressures facing internal auditors in the public sector:
Lack of funding, higher expectations and threats to independence and objectivity
What about the external threats?
Well, the risk landscape, powered more than ever by globalisation and digital innovation is changing faster than ever. That is a cliché, I know, but it has the advantage of also being profoundly true.
This situation has given public sector internal audit departments the opportunity not just to audit the historical performance of their organisations, but to work with their organisations to come to a common understanding about new and changing risks. Here is what they say are the top risks facing the sector:
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11. Action Points: Dealing With Rapid Change
Not just business as usual–auditing the payroll every year is not the most important objective.
Getting close to stakeholders is essential if internal audit is to anticipate their needs.
Investing in forward-looking, risk-based auditing practices is key.
Providing an annual statement on the most important risks to the organization’s strategic objectives is of central importance.
So, what can be done?
Talk to the slides emphasising the need for forward looking action to anticipate the needs of stakeholders

12. Lack of Funds Impacts IT Capabilities
One of the areas that may affect internal audit’s ability to deliver forward-looking auditing, is the impact of cuts on its IT capabilities.
The public sector is under-performing when it comes to using data analytics in four key areas – not uniformly. The blue column shows that IA Is trending about 10 percentage points lower than those in the financial sector, publicly traded companies and privately held enterprises in its use of data analytics to identify possible frauds – the yellow shows a similar picture with using data analytics to discover potential issues through risk and control monitoring.
These should be bread and butter areas for internal auditing to demonstrate that they can utilise these tools to add value to the business.
The capability and skills are being used for regulatory compliance second only to financial services in the data that we have – that probably shows the bias of some key stakeholders to use audit as a compliance function

13. Action Points: Improving Technology Use
CAEs must be prepared to demonstrate a return on investment to stakeholders in an investment in effective data analysis tools and to illustrate how the data analytics will support the achievement of objectives.
Audit departments that are just beginning to use data analytics can start small and focus on areas where the benefits are clear.
With the right expertise, significant analysis can be done in readily available tools, such as Microsoft Excel.
To facilitate the implementation of data analytics projects, CAEs should:
Identify existing competency gaps.
Frame a knowledge management strategy to address major gaps in expertise.
Develop an appropriate sourcing strategy.
But we can and must do better in this area. We must make the argument for the budget and then demonstrate our capabilities
To get the most out of these technologies, auditors need to ensure that their audits – and specifically the IT resources allocated to those audits – are aligned to their organisation’s strategic objectives. About 60% of public sector CAEs say they are fully or almost fully aligned, which is nearly as high as the financial sector (63%) and higher than non-financial, privately held organizations (55%) and non-financial, publicly traded organizations (49%).
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14. Use of the Standards
Here is an exhibit showing how well internal audit in the public sector aligns with the IIA’s Standards. On average, it does almost as well as non-public sector organisations – but regional variations are huge: 38% of respondents saying they are aligned in Latin America, for example, with 68% saying they are in North America.
Within the public sector, the use of the Standards is complicated by other mandatory government guidelines or legal statutes, which vary between local, regional, or national levels. In general, use of the Standards is lowest at the local level and increases to the highest percentage at the international level – that is probably something we could have predicted, but it does show where most effort needs to be expended
CAEs need to make the argument to their key stakeholders that following the IIA’s Standards can be of real value to their organisations. They need to adopt best practices from the IPPF and demonstrate how well that works. And they need to have the courage to audit outside and strict mandatory areas where their risk assessments show that this is necessary

15. Action Points: Use of the Standards
Differences in regional internal audit practices reinforce the need for a principles-focused, coherent framework that facilitates consistent development, interpretation, and application of concepts, methodologies, and techniques useful in the professional practice of internal auditing.
The overarching benefits of implementing professional auditing standards include:
Defining basic principles that represent the practice of internal auditing.
Providing a framework for performing and promoting a broad range of value-added internal auditing.
Establishing the basis for the evaluation of internal audit performance.
Fostering improved organizational processes and operations.
The IIA Standards are designed for flexibility –that is why they are principles-based
Let’s remind ourselves what the over-arching benefits of implementing professional auditing standards include:
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It is not always easy to make the argument for the Standards, especially as boards and other stakeholders may see them as an additional burden. But CAEs must work hard to convince them that the Standards provide a road to auditing excellence and it is one that the organisation must take if it is to successfully achieve high quality assurance over its operational and strategic objectives

16. Building Excellence in Internal Audit
Budget restraints have affected the ability of public sector internal audit departments to attract and retain talent, especially in technical areas such as cyber security and data mining.
Private sector companies can cherry-pick the most talented public sector auditors by enticing them with better pay.
But, as you can see from the above exhibit, it is not all bad news. People in the public sector receive more formal internal audit training than any other sector – 48 hours per year vs. 44 globally. In most countries, public sector organizations support training for staff to an agreed level, although that still may not be enough to keep on top of fast-moving events.
Sub-Saharan Africa and Latin America and the Caribbean stand our in the above exhibit.
But training is not enough on its own – we have to be able to retain those staff and develop them further to give them fulfilling careers

17. Action Points: Retaining Talent
Develop excellent internal training programs to keep the competencies and knowledge of staff up-to-date, including providing time off to attend workshops and conferences.
Create a good working environment and flexible employment conditions, where possible.
Foster a sense of belonging, so that auditors who may work in isolated areas connect regularly with their colleagues and also with their local IIA institutes and chapters.
So here are a few additional pointers to what we can do with our constrained budgets
Speak to slides

18. CBOK 2015 Releases Jul. 2015 Aug. 2015 Sept. 2015 Oct. 2015 Nov. 2015
IIA International Conference
Governance, Risk, and Control Conference
South Africa Conference
IIA Financial Services Exchange
ECIIA Conference
All Star Conference
Southern Regional Conference
ACIIA Conference
IIA Midyear Committee Meetings
Jul. 2015
Aug. 2015
Sept. 2015
Oct. 2015
Nov. 2015
Dec. 2015
Driving Success in a Changing World: 10 Imperatives for Internal Audit
Navigating Technology’s Top 10 Risks: Internal Audit’s Role
Staying a Step Ahead: Internal Audit’s Use of Technology
A Global View of Financial Services Audits:
Challenges, Opportunities, and the Future
Who Owns Risk?
A Look at Internal Audit’s Changing Role
Combined Assurance: One Language, One
Voice, One View
Responding to Fraud: Exploring Where Internal Auditing Stands
Auditing the Public Sector: Managing Expectations, Delivering Results
Measuring Internal Audit Value and Performance
Core Competency Levels for Internal Auditors
Please share information about the publication of upcoming CBOK reports and where to go for the free download.

19. CBOK 2016 Releases GAM Conference SoPac Conference
Leadership Conference
IIA International Conference
Jan. 2016
Feb. 2016
Mar. 2016
Apr. 2016
May 2016
Jun. 2016
The Skills Most Desired by IA Managers for Their Staffs
Use of Third Parties by Internal Audit
Interacting with Audit Committees
CAE Career Path
Women in IA: Representation and Trends
Maturity Levels for IA Dept. Around the World
How to Evaluate and Motivate Your Staff
Certifications Held by Internal Auditors
Ethical Pressures Faced by Internal Auditors
IIA Standards: Conformance and Trends
Quality Assurance and Improvement Program Trends
Integrated Reporting
Organizational Governance: Internal Audit's Role
Additional reports that will be available for a free download..

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21. About The IIA Research Foundation
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