Presentation to the partners of ig mpw by libby mac rae and rob mcdonald
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Transcript of Presentation to the partners of ig mpw by libby mac rae and rob mcdonald
PRESENTATION TO THE PARTNERS OF IG MPW
IndII Activity P243-02: Governance Reform in Internal Audit Function (IG-MPW)
Internal Audit Capability Model (IA-CM) for the Public Sector
Overview Presentation Libby MacRae Bob McDonald
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Agenda
The IA-CM
– Its structure and underlying concepts
– Principles in its application
– Using the IA-CM
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What is the IA-CM?
• A universal model with comparability – principles, processes and practices
• To be used globally to improve internal auditing
• Framework for assessing capabilities against standards and practices
• Communication vehicle for defining and advocating the importance of internal auditing
• Roadmap and toolkit for orderly improvement
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Underlying Principles
IA Activity’s Obligations
• Be an integral component of effective governance in the public sector
• Assist organizations achieve their objectives and account for their results
Organization’s Obligations
• Determine optimum level of IA capability to support required governance structures
• Achieve and maintain the desired capability
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Underlying Principles
Selecting Optimum Capability
• Three variables
– Environment
– Organization
– IA Activity
• Different capability required
• Auditing must be cost-effective
• No “one size fits all”
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IA-CM Levels
LEVEL 5
Optimizing
LEVEL 4
Managed
LEVEL 3
Integrated
LEVEL 2
Infrastructure
LEVEL 1
Initial
No sustainable, repeatable
capabilities – dependent upon
individual efforts
Sustainable and repeatable IA practices and procedures
IA management and professional practices uniformly applied
IA learning from inside and outside the organization for continuous improvement
IA integrates information from across the organization to improve governance and risk management
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Level 1- Initial
• Ad hoc or unstructured
• Isolated single audits, document reviews, transaction verification
• Outputs dependent on incumbent skills
• No professional practices or standards applied
• Funding approved by management as needed
• Absence of Infrastructure
• Auditors likely belong to a larger organizational unit
• Institutional capability not developed
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Level 2- Infrastructure
• Repeatable processes or capability established
• Reporting relationships, management, administrative infrastructure, professional practices established
• Audit planning based principally on management priorities
• Continued reliance essentially on skills and competencies of incumbents
• Partial conformance with IIA Standards
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Level 3 - Integrated
• Defined IA policies, procedures, documented and integrated into organization structure
• IA management and professional practices well established, uniformly applied
• IA beginning to align with business and its risks • IA providing advice on performance and
management of risks • Focus on team building and IA capacity and
independence and objectivity • Generally conforms to IIA Standards
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IA-CM 1-page Matrix Services and Role
of IA
People Management Professional
Practices
Performance
Management and
Accountability
Organizational
Relationships
and Culture
Governance
Structures
Level 5 –
Optimizing
IA Recognized as
Key Agent of
Change
Leadership
Involvement with
Professional Bodies
Workforce Projection
Continuous
Improvement in
Professional
Practices
Strategic IA
Planning
Public Reporting of
IA Effectiveness
Effective and
Ongoing
Relationships
Independence,
Power, and
Authority of the IA
Activity
Level 4 –
Managed
Overall Assurance
on Governance,
Risk Management,
and Control
IA Contributes to
Management
Development
IA Activity Supports
Professional Bodies
Workforce Planning
Audit Strategy
Leverages
Organization’s
Management of
Risk
Integration of
Qualitative and
Quantitative
Performance
Measures
CAE Advises and
Influences Top-
level
Management
Independent
Oversight of the
IA Activity
CAE Reports to
Top-level
Authority
Level 3 –
Integrated
Advisory Services
Performance/
Value-for-Money
Audits
Team Building and
Competency
Professionally
Qualified Staff
Workforce
Coordination
Quality
Management
Framework
Risk-based Audit
Plans
Performance
Measures
Cost Information
IA Management
Reports
Coordination with
Other Review
Groups
Integral
Component of
Management
Team
Management
Oversight of the
IA Activity
Funding
Mechanisms
Level 2 –
Infrastructure
Compliance
Auditing
Individual
Professional
Development
Skilled People
Identified and
Recruited
Professional
Practices and
Processes
Framework
Audit Plan Based
on Management/
Stakeholder
Priorities
IA Operating
Budget
IA Business Plan
Managing within
the IA Activity
Full Access to the
Organization’s
Information,
Assets, and
People
Reporting
Relationships
Established
Level 1 –
Initial
Ad hoc and unstructured; isolated single audits or reviews of documents and transactions for accuracy and compliance; outputs
dependent upon the skills of specific individuals holding the position; no specific professional practices established other than those
provided by professional associations; funding approved by management, as needed; absence of infrastructure; auditors likely part of a
larger organizational unit; no established capabilities; therefore, no specific key process areas
© 2009, The IIA Research Foundation – All Rights Reserved
Key Process Area (KPA)
Purpose
Essential
Activities
Outputs
Outcomes
Institutionalizing Practice
Examples
Key Process Area
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People Management Level 2 – Infrastructure
Skilled People Identified and Recruited
Purpose – To identify and attract people with the necessary competencies and relevant skills to carry out the work of the IA activity. Appropriately qualified and recruited internal auditors are more likely to provide credibility to the internal audit results.
Essential Activities • Identify and define the specific audit tasks to be conducted • Identify the knowledge, skills (technical and behavioral), and other
competencies required to conduct audit tasks • Develop job descriptions for positions • Determine proper pay classification for positions • Conduct valid, credible recruitment process to select appropriate candidates
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People Management Level 2 – Infrastructure
Skilled People Identified and Recruited
Outputs • Internal audit positions are filled with appropriately qualified persons
Outcomes • Audit work is conducted with due professional care • There are credible audit observations, conclusions, and recommendations
Institutionalizing Practice Examples • Visible commitment and support through senior management action to ensure that a
competent and qualified CAE is in place, and the necessary resources are provided to appropriately staff the IA activity
• Staffing and recruitment policy • Job descriptions • Classification system, including levels specific to internal auditing
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Institutionalizing a Key Process Area
Commitment To Perform Activities
Ability to Perform
Activities
Activities Verified
Activities Performed
Activities Measured
Key Process Area
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Using the IA-CM as an Assessment Tool
• Understand the purpose and structure of the IA-CM • Identify the KPAs that appear to be institutionalized by
the IA activity • Obtain and review documentation re: IA activity,
organization, and environment • Interview managers/stakeholders • Confirm the actual KPAs institutionalized • Determine the capability level • Communicate and confirm the opportunities for
improvement • Develop and implement the improvement plan
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Principles in its Application
• Apply professional judgment
• Environmental and organizational factors
• A practice cannot be improved if it cannot be repeated
• Capability gets built in steps/stages
• KPAs at one level set the foundation for KPAs at the next level
• A KPA is achieved when it is institutionalized into the culture of the IA activity
• All KPAs, up to and including the KPAs at a given level, must be institutionalized to achieve that level
• Not all all elements need be at the same level
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Important Considerations
• All levels in the IG participate
• Organizational management and stakeholder support
• Processes are institutionalized and sustainable
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Procurement Standards in Indonesia
IndII Activity P243-02: Governance Reform in Internal Audit Function (IG-MPW)
9/6/2012 IndII Activity P243-02: Governance Reform
in Internal Audit Function (IG-MPW)
Presented by Rob Thompson
Identify the Need
Develop the Specification
Define the Contractual Terms
Research the Market
Identify Pre-Qualification and Select Bidders
Invite Quotes/ Tenders
Analyse Quotes/ Tenders
Clarify/ PTN VFM
Contract Award
Review of Performance
Payment
Approval to Proceed
Monitor Performance
Develop Contract Strategy
Manage Relationship
Set Evaluation Criteria
The Procurement Process
Key Areas of Procurement Activity
• Good Sourcing Principles and Practices
• Price and Cost Analysis
• Inventory Management
• Legal Protection
Procurement Competencies being prepared
Approach • Analysis of current competencies, procedures, practices and policies
• Work with MPW management and selected DG’s to enhance procurement competency
• Develop and support the ULP in developing good procurement practice
• Applying Risk Assessment & Management techniques to all procurement
• Introduction of best practice procurement training
• Presenting and mentoring the introduction of new procurement tools and techniques
• Providing practical guidance to MPW & DG’s to ensure a consistent application of best practice techniques
Key Messages • Early involvement (by both parties) in the
procurements to resolve potential risk areas in time
• Shared understanding of what is procurement • Integrate lessons learnt from past experience in
future training and procurement practices • Best practice contract management • Cost not price • Performance not conformance • Consistency in actions.