Today, more than ever, companies depend on the quality of internal audit. There is a significant demand for good governance, accountability and transparency. Audit committee’s and management are asking tough questions about the quality and effectiveness of their internal audit functions. It is a business imperative, if not a requirement, to get the most out of your internal audit.
PricewaterhouseCoopers Internal Audit Services practice has extensive experience in assisting audit committee’s, Chief Audit Executives and management in ensuring internal audit quality and effectiveness. Our experience has shown that internal audit must address the following 3 dimensions to be considered highly effective in today’s challenging environment:
1. Effectiveness in meeting the needs of stakeholders;
2. Efficiency and effectiveness in the use of the latest internal audit best practices; and
3. Effectiveness in complying with applicable professional and/or regulatory internal audit standards and requirements.
Increasingly, audit committees and management are looking for objective feedback on the effectiveness of their internal audit functions. This demands a structured approach and methodology as well as in-depth knowledge of internal audit practices and processes.
The PwC approach to assessing internal audit quality and effectiveness includes a four-phase plan that follows the Internal Audit Framework.
Phase 1 - Project Planning includes defining the specific objectives, stakeholders and deliverables. Key to this phase is a clear and tailored set of objectives for the project overall. For many organizations, the deliverable will include not just a report on internal audit but an action plan to address any gaps noted.
Phase 2 - Value Driver Identification includes interviews and surveys to gain insight and understanding of both the value drivers of internal audit stakeholders and perceptions of current performance.
Phase 3 - Current State Assessment includes detailed reviews and analysis of internal audit's core processes. In this phase, Profiler™, PwC's proprietary internal audit best practices benchmarking tool, is used to assess and benchmark the practices of an internal audit function. More importantly, Profiler also enables the identification of other possible best practices that may fit the specific value drivers of the organization. This phase also includes assessments of compliance with applicable professional standards.
Phase 4 - Solution Development includes the development of not only a report of findings and observations, but an action plan to implement the specific recommendations that appear to offer the highest value to the organization.
