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Presentation Objectives
The meaning of good governance The IIAs governance model Participants and players Specific Internal Auditing activities Steps for embracing Internal Audits role
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In Other Words
It (governance) is essentially a function of leadership and direction within an organisation; appropriate risk management and control over its activities; and the manner in which meaningful disclosure relating to its activities is made to shareholders and other stakeholders.
Complies with societys legal & regulatory rules Satisfies the generally accepted business norms, ethical precepts, and social expectations of society Provides overall benefit to society and enhances interests of stakeholders Reports fully and truthfully to its owners, regulators, other stakeholders, and general public to ensure accountability for its decisions, actions, conduct , and performance
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Effective
Governance
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Board Responsibilities
Establishes the tone at the top Focal point for all governance activities Ultimate accountability Oversees all organizational activities, but does not directly manage any of them
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Senior Management
Establishes strategic direction and an entitys value system (with board oversight) Provides assurance of risk management process, operations monitoring, measurement of results, and implementation of timely corrective actions
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Operating Management
Deploys strategy, enforces internal control, and provides direct supervision for areas under its control Accountable to executive management and ultimately the board for implementing and monitoring the risk management process and establishing effective and appropriate internal control systems
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External Auditing
Provides independent assurance on the financial statement preparation and reporting activities in accordance with applicable regulations and accounting principles
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Internal Auditing
Performs assessments to provide assurance the governance structures and processes are properly designed and operating effectively Provides advice on potential improvements to governance structures and processes
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Standard 2130
IA should assess and make recommendations for improving the governance process:
Promoting appropriate ethics & values Ensuring effective performance management Effective communication of risk & control information Effective coordinating of activities & communication between Board, External Auditors, Internal Auditors & Management
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Provide advice with focus on governance structure to meet compliance requirements and basic risks of organization
Less Structured
More Structured
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IA Activities (continued)
Consider assessing the following:
Education of the Board Proper Assignment of Accountabilities and Performance Management Communication and Acceptance of Ethics Policies and Codes of Conduct Ethics Investigations and Related Employee Discipline Management Evaluation and Compensation
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IA Activities (continued)
Consider assessing the following:
Recruitment Processes for Senior Management and Board Members Employee Training Governance Self-assessments Comparison with Governance Codes or Best Practices External Communications Oversight of External Audit
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Other Considerations
Internal Audits role in governance may impair its independence and should be evaluated and if necessary communicated to management and the board. If impaired internal audit should not perform audits or assessments related to this role.
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IIA Resources
To review the IIAs Position Paper on Governance and other topics visit The IIA Website at www.theiia.org. (click on guidance).
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