1. FIELDWORK Expectations, challenges, methods, results
Costanza Schivi – 8 April 2019
“Internal Audit Service: Improving the Commission’s Performance”

2. Nature of the fieldwork
Systematic process of objectively gathering evidence about an entity’s internal control system and evaluating it.
Spelled out in the Engagement Planning Memorandum (EPM).
 “Internal Audit Service: Improving the Commission’s Performance”

3. We audit:
We audit:

4. “Internal Audit Service: Improving the Commission’s Performance”
Process:
Triggering event: Preliminary survey completed Input: -Engagement Planning Memorandum -Risk Control Matrix /Performance Audit Matrix Output: -Workpapers -Observations (or Audit Issues) -Recommendations
 “Internal Audit Service: Improving the Commission’s Performance”

5. Methods: Financial/compliance audit
Systems audit approach => assessment of the internal control system followed by a strength/weakness analysis (tests of procedures).
Where the operation of the systems and controls are assessed to be satisfactory, tests of transactions are carried out to ensure they are effectively applied in practice
 “Internal Audit Service: Improving the Commission’s Performance”

6. Risk and control matrix
Process risk and control matrix
Process Name
SYSTEM / PROCESS TESTING
TRANSACTION TESTING
CONCLUSION
Process
Risk characteristics
Control characteristics
Audit program
No.
Process / Activity description - objective (narrative/flowchart)
Risk description
Inherent risk assessment
Mitigating Controls description
Control Frequency
Control Adequacy
Testing procedures/WP reference
Control effectiveness
OBS reference
 “Internal Audit Service: Improving the Commission’s Performance”

7. Methods: Performance audits
The approach can be more flexible and creative
Various analytical skills may be applied in order to meet the objectives of the audit.
Objective: to obtain relevant and reliable evidence sufficient to draw conclusions
 “Internal Audit Service: Improving the Commission’s Performance”

8. Performance audit matrix
EUROPEAN COMMISSION
PERFORMANCE AUDIT MATRIX
Audit
[Name of the audit]
INTERNAL AUDIT SERVICE
Ref
Ref of the audit
Main question of the audit (Level 1): [Clear description of the audit objective under the form of a question]
PRELIMINARY SURVEY
FIELDWORK AND VALIDATION
Level 2 questions
Level 3 questions
Criteria
Testing procedures
Potential answers and conclusions (*)
Potential recommendations (*)
Testing results
X-ref WP
X-ref FVT
WHAT DO WE WANT TO KNOW?
WHAT STANDARD DO WE MEASURE AGAINST?
WHAT EVIDENCE/INFORMATION IS NEEDED? HOW TO FIND AND ANALYSE DATA?
Ok/not ok/ok but
[Sub-question 1]
[Sub-question 1.1.]
Test A OK
<WP A>
N/A
Test B
Not OK
<WP B>
Obs.1
[Sub-question 1.2.]
[Sub-question 1.3.]
[Sub-question 1.X]
[Sub-question 2]
[Sub-question 2.1.]
[Sub-question 2.2.]
[Sub-question 2.3.]
[Sub-question 2.X]
[Sub-question 3]
[Sub-question 3.1.]
[Sub-question 3.2.]
[Sub-question 3.3.]
[Sub-question 3.X]
(*): it is left to the appreciation of the Audit manager whether to fill in the potential findings and recommendations or not.
 “Internal Audit Service: Improving the Commission’s Performance”

9. “Internal Audit Service: Improving the Commission’s Performance”
Finding/Observation forms are created for any issues identified by either the tests of procedures or tests of transactions or other persuasive, factual audit evidence (performance audits). All engagements by the IAS will involve a continuous validation process with the auditees during the fieldwork at the operational level.
NB: In accordance with international audit standards, auditors' workpapers are NOT validated
with auditees.
 “Internal Audit Service: Improving the Commission’s Performance”

10. “Internal Audit Service: Improving the Commission’s Performance”
The aim of the formal validation meeting (at the end of the fieldwork) is to reach substantive agreement, at the appropriate hierarchical level, on the facts so as to avoid them being reopened or questioned again in the final stages of the audit.
 “Internal Audit Service: Improving the Commission’s Performance”

11. Examples of questions applied in a performance audit fieldwork
Is the process supervised at the appropriate level? (size of the staff, relevance of the work, experience)
Are internal controls effective?
Has the reporting been issued timely and appropriately?
Is there appropriate tone at the top in terms of anti-fraud?
Is the staff sufficiently trained?
Has the process been adequately prepared?
 “Internal Audit Service: Improving the Commission’s Performance”

12. “Internal Audit Service: Improving the Commission’s Performance”
Challenges:
Planning (timing)
Documentation
Sample size
Validation
“Audit maturity” of auditee
Benchmarks
 “Internal Audit Service: Improving the Commission’s Performance”

13. Questions?

14. “Internal Audit Service: Improving the Commission’s Performance”
Contact the Internal Audit Service:
“Internal Audit Service: Improving the Commission’s Performance”