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As the business management landscape shifts from a focus on recession survival tactics to growth strategies for economic recovery, the roles of internal audit and the chief audit executive (CAE) continue to grow.
Risk acumen is at the core of internal audit's transformation. CAEs and their teams are now being asked to expand their more traditional assurance and consulting roles, and apply their business insights and audit expertise in key organization-wide initiatives, particularly those pertaining to fraud and risk management.
According to a report by The Institute of Internal Auditors (IIA) titled, Internal Auditing in 2010: Shifting Priorities for a Changing Environment, risk management is the number one strategic priority for CAEs and the key area of focus for internal audit activities now -- and into the future.
Already steeped in risk identification, internal auditing is increasingly beneficial to strategic transformational initiatives, says Kelly Barrett, CAE for The Home Depot, according to a report by the IIA and Korn/Ferry International. "I believe that audit committees are starting to see how big a role internal auditors can and should play in helping an organization get it right on the front end—especially when an organization is undergoing significant change," Barrett observes.
Other more traditional risk management roles -- such as navigating the complex regulatory conditions of a post-Sarbanes-Oxley era; taming unruly internal controls and data environments; and working with an increasing audit-savvy team of executive stakeholders -- remain part of internal audit's mandate.
Successfully addressing these demands requires a combination of leadership, processes and tools, including, most prominently, a stronger role in boosting the organization's overall risk management capabilities as well as greater use of automation and analytics, such as continuous auditing, to deliver greater efficiency and effectiveness.
Automation's Critical Role
As internal audit departments are challenged to do more with less, technology must play a critical role. Automating audit processes through data analytics and continuous monitoring software not only improves internal audit quality and efficiency, but ultimately adds value with significant contributions to business assurance.
At the General Audit Management conference (GAM), Fortune 250 enterprises overwhelmingly agreed that the promised benefits are now coming to fruition in their organization. One CAE, in fact, said, "Continuous monitoring is not an opportunity now; it is something that we all must do and do correctly as our organizations increasingly move to global ERP [enterprise resource planning] systems." Correspondingly, some participants said that developing and deploying this and other audit-automation capabilities have emerged as top strategic objectives of their internal audit function.
With its view across all functions of the organization, internal audit is ideally suited to provide risk insights to business leaders on strategic initiatives, and technology enables them to offer recommendations based on real-time, data-driven findings. Data analytics can help internal auditors expose potential risk areas related to M&A, process transformations or expansion into new geographies.
Data analytics also play a critical role throughout the audit cycle and can add significant value through both controls monitoring and bottom-line savings and recoveries. Why? As budgets tighten and the volume of data grows, the risk of fraud and errors increase. Transaction monitoring can reduce fraud and error, while effective analytics add measurable efficiencies to audit and risk management processes.
Audit automation delivers one additional benefit that is particularly valuable in light of a highly volatile economic picture: sustainability. By storing practices, knowledge and data in a user friendly and easily accessible system rather than solely in an individual's brain, internal audit functions are better positioned to manage the types of significant changes that are occurring with greater frequency today: organizational restructuring, staff reductions and the departure of top internal audit talent.
Dramatic examples of the bottom-line benefits audit analytics provide can be found across industries and geographies:
- One large government department has achieved over $20 million in annual savings through an expense approval and monitoring program.
- Another major telecommunications firm increased its annual billings by $750,000 when analytics technology uncovered an invoice generation error that was undercharging hundreds of thousands of customers.
- And to highlight the value of automated data testing, one of the world's largest multinationals now uses data analytics to monitor all purchase-to-pay transactions for over 900 entities on a daily basis.
In a few more unusual (and entertaining) examples, data analytics revealed an employee of a well-known organization had spent over $12,000 on tarot card readings, while another firm learned that an employee was using a company credit card to purchase cattle for his ranch. These examples of both quick, bottom-line wins and ongoing business value reinforce the need to manage risk with technology.
Best Practices: People, Process and Tools
As companies implement data analytics, they quickly advance along the audit and compliance analytics continuum from one-off analysis and sample-based testing to repetitive processes. At the far end of that spectrum lies the continual execution of automated audit and monitoring tests -- representing the greatest opportunities for organizations to achieve dramatic benefits and efficiencies.
So why do some organizations achieve enviable, quantifiable results from their technology investment while others seem to flounder? The answer lies in best practices that make the analytics both sustainable and well managed. It's also important to not think of analytics purely in terms of technology, but understand that people and processes are equally important to ongoing success.
With data analytics, success comes from applying sustainable technology across broad financial, operational and business systems. With effective, automated data monitoring, control gaps can be plugged and problem transactions can be repaired in real time. By combining audit analytics with management's responsibility to monitor risk and controls, forward-thinking organizations can move toward a more integrated approach to audit and risk management -- and that's smart spending, in any economic climate.
No one has the crystal ball to determine what the future will bring. Yet, amid the great economic uncertainties facing companies and the mounting pressures bearing down on internal audit functions, this much is certain: CAEs have a unique opportunity to solidify their role as a strategic business partner to the CEO and CFO.
Steve Biskie, CPA, CITP, CISA, is director of customer solutions with ACL Services Ltd. He has over 15 years experience in information technology audit for public accounting (as a former Deloitte manager), private industry, and with specialized risk management consulting firms. His role at ACL is focused on designing services that enable organizations to achieve best practices in the use of audit analytics. He is also the author of Surviving an SAP Audit (SAP Press, 2010).
Steve Biskie, CPA, CITP, CISA, is director of customer solutions with ACL Services Ltd. He has over 15 years experience in information technology audit for public accounting (as a former Deloitte manager), private industry, and with specialized risk management consulting firms. His role at ACL is focused on designing services that enable organizations to achieve best practices in the use of audit analytics. He is also the author of Surviving an SAP Audit (SAP Press, 2010).
www.acl.com
Published in first on BusinessFinance
Source : http://businessfinancemag.com/article/risk-intelligence-and-emerging-role-internal-audit-0312
Risk acumen is at the core of internal audit's transformation. CAEs and their teams are now being asked to expand their more traditional assurance and consulting roles, and apply their business insights and audit expertise in key organization-wide initiatives, particularly those pertaining to fraud and risk management.
According to a report by The Institute of Internal Auditors (IIA) titled, Internal Auditing in 2010: Shifting Priorities for a Changing Environment, risk management is the number one strategic priority for CAEs and the key area of focus for internal audit activities now -- and into the future.
Already steeped in risk identification, internal auditing is increasingly beneficial to strategic transformational initiatives, says Kelly Barrett, CAE for The Home Depot, according to a report by the IIA and Korn/Ferry International. "I believe that audit committees are starting to see how big a role internal auditors can and should play in helping an organization get it right on the front end—especially when an organization is undergoing significant change," Barrett observes.
Other more traditional risk management roles -- such as navigating the complex regulatory conditions of a post-Sarbanes-Oxley era; taming unruly internal controls and data environments; and working with an increasing audit-savvy team of executive stakeholders -- remain part of internal audit's mandate.
Successfully addressing these demands requires a combination of leadership, processes and tools, including, most prominently, a stronger role in boosting the organization's overall risk management capabilities as well as greater use of automation and analytics, such as continuous auditing, to deliver greater efficiency and effectiveness.
Automation's Critical Role
As internal audit departments are challenged to do more with less, technology must play a critical role. Automating audit processes through data analytics and continuous monitoring software not only improves internal audit quality and efficiency, but ultimately adds value with significant contributions to business assurance.
At the General Audit Management conference (GAM), Fortune 250 enterprises overwhelmingly agreed that the promised benefits are now coming to fruition in their organization. One CAE, in fact, said, "Continuous monitoring is not an opportunity now; it is something that we all must do and do correctly as our organizations increasingly move to global ERP [enterprise resource planning] systems." Correspondingly, some participants said that developing and deploying this and other audit-automation capabilities have emerged as top strategic objectives of their internal audit function.
With its view across all functions of the organization, internal audit is ideally suited to provide risk insights to business leaders on strategic initiatives, and technology enables them to offer recommendations based on real-time, data-driven findings. Data analytics can help internal auditors expose potential risk areas related to M&A, process transformations or expansion into new geographies.
Data analytics also play a critical role throughout the audit cycle and can add significant value through both controls monitoring and bottom-line savings and recoveries. Why? As budgets tighten and the volume of data grows, the risk of fraud and errors increase. Transaction monitoring can reduce fraud and error, while effective analytics add measurable efficiencies to audit and risk management processes.
Audit automation delivers one additional benefit that is particularly valuable in light of a highly volatile economic picture: sustainability. By storing practices, knowledge and data in a user friendly and easily accessible system rather than solely in an individual's brain, internal audit functions are better positioned to manage the types of significant changes that are occurring with greater frequency today: organizational restructuring, staff reductions and the departure of top internal audit talent.
Dramatic examples of the bottom-line benefits audit analytics provide can be found across industries and geographies:
- One large government department has achieved over $20 million in annual savings through an expense approval and monitoring program.
- Another major telecommunications firm increased its annual billings by $750,000 when analytics technology uncovered an invoice generation error that was undercharging hundreds of thousands of customers.
- And to highlight the value of automated data testing, one of the world's largest multinationals now uses data analytics to monitor all purchase-to-pay transactions for over 900 entities on a daily basis.
In a few more unusual (and entertaining) examples, data analytics revealed an employee of a well-known organization had spent over $12,000 on tarot card readings, while another firm learned that an employee was using a company credit card to purchase cattle for his ranch. These examples of both quick, bottom-line wins and ongoing business value reinforce the need to manage risk with technology.
Best Practices: People, Process and Tools
As companies implement data analytics, they quickly advance along the audit and compliance analytics continuum from one-off analysis and sample-based testing to repetitive processes. At the far end of that spectrum lies the continual execution of automated audit and monitoring tests -- representing the greatest opportunities for organizations to achieve dramatic benefits and efficiencies.
So why do some organizations achieve enviable, quantifiable results from their technology investment while others seem to flounder? The answer lies in best practices that make the analytics both sustainable and well managed. It's also important to not think of analytics purely in terms of technology, but understand that people and processes are equally important to ongoing success.
With data analytics, success comes from applying sustainable technology across broad financial, operational and business systems. With effective, automated data monitoring, control gaps can be plugged and problem transactions can be repaired in real time. By combining audit analytics with management's responsibility to monitor risk and controls, forward-thinking organizations can move toward a more integrated approach to audit and risk management -- and that's smart spending, in any economic climate.
No one has the crystal ball to determine what the future will bring. Yet, amid the great economic uncertainties facing companies and the mounting pressures bearing down on internal audit functions, this much is certain: CAEs have a unique opportunity to solidify their role as a strategic business partner to the CEO and CFO.
Steve Biskie, CPA, CITP, CISA, is director of customer solutions with ACL Services Ltd. He has over 15 years experience in information technology audit for public accounting (as a former Deloitte manager), private industry, and with specialized risk management consulting firms. His role at ACL is focused on designing services that enable organizations to achieve best practices in the use of audit analytics. He is also the author of Surviving an SAP Audit (SAP Press, 2010).
Steve Biskie, CPA, CITP, CISA, is director of customer solutions with ACL Services Ltd. He has over 15 years experience in information technology audit for public accounting (as a former Deloitte manager), private industry, and with specialized risk management consulting firms. His role at ACL is focused on designing services that enable organizations to achieve best practices in the use of audit analytics. He is also the author of Surviving an SAP Audit (SAP Press, 2010).
www.acl.com
Published in first on BusinessFinance
Source : http://businessfinancemag.com/article/risk-intelligence-and-emerging-role-internal-audit-0312
