Essential Guide to Internal Auditing

K.H. Spencer Pickett has an international reputation as a leading author on the subject of internal auditing and specializes in the development of E-learning resources.

• List of Abbreviations xi1 Introduction 1Introduction 11.1 Reasoning behind the Book 21.2 The IIA Standards and Links to the Book 31.3 How to Navigate around the Book 41.4 The Essential Guide as a Development Tool 71.5 The Development of Internal Auditing 7Summary and Conclusions 11Endnotes 122 Corporate Governance Perspectives 13Introduction 132.1 The Agency Model 142.2 Corporate Ethics and Accountability 172.3 International Scandals and Their Impact 202.4 Models of Corporate Governance 262.5 The Institute of Internal Auditors 312.6 The External Audit 332.7 The Audit Committee 392.8 Internal Audit 422.9 The Link to Risk Management and Internal Control 432.10 Reporting on Governance, Risk and Internal Controls 442.11 New Developments 48Summary and Conclusions 53Endnotes 563 Managing Risk 59Introduction 593.1 What is Risk? 603.2 The Risk Challenge 613.3 Risk Management Process 633.4 Mitigation through Controls 663.5 Risk Registers and Appetites 693.6 The Risk Policy 743.7 Enterprise-Wide Risk Management 793.8 Control Self-Assessment 813.9 Embedding Risk Management 823.10 The Internal Audit Role in Risk Management 823.11 New Developments 86Summary and Conclusions 89Endnotes 924 Internal Controls 95Introduction 954.1 Why Controls? 964.2 Control Framework – COSO 1044.3 Control Framework – CoCo 1094.4 Other Control Models 1114.5 Links to Risk Management 1134.6 Control Mechanisms 1144.7 Importance of Procedures 1214.8 Integrating Controls 1224.9 The Fallacy of Perfection 1244.10 The Complete Control Model 1254.11 New Developments 127Summary and Conclusions 129Endnotes 1305 The Internal Audit Role 131Introduction 1315.1 Defining Internal Audit 1315.2 The Four Main Elements 1345.3 The Audit Charter 1375.4 Audit Services 1395.5 Independence 1415.6 Audit Ethics 1465.7 Police Officer versus Consultant 1495.8 Managing Expectations through Web Design 1515.9 Audit Competencies 1555.10 Training and Development 1575.11 New Developments 160Summary and Conclusions 164Endnotes 1656 Professionalism 167Introduction 1676.1 Audit Professionalism 1676.2 Internal Auditing Standards 1706.3 Due Professional Care 1846.4 Professional Consulting Services 1866.5 The Quality Concept 1886.6 Supervision 1896.7 Internal Review 1916.8 External Reviews 1926.9 Marketing the Audit Role 1966.10 Creating the Audit Image 1976.11 New Developments 199Summary and Conclusions 200Endnotes 2017 The Audit Approach 203Introduction 2037.1 The Risk-Based Systems Approach 2037.2 Control Risk Self-Assessment (CRSA) 2087.3 The CRSA Process 2107.4 Integrating Self-Assessment and Audit 2107.5 Fraud Investigations 2117.6 Information Systems Auditing 2177.7 Compliance 2217.8 Value for Money (VFM) 2237.9 The Consulting Approach 2247.10 The ‘Right’ Structure 2267.11 New Developments 227Summary and Conclusions 233Endnotes 2348 Setting an Audit Strategy 235Introduction 2358.1 Risk-Based Strategic Planning 2358.2 Resourcing the Strategy 2428.3 Managing Performance 2458.4 The Auditor Appraisal Scheme 2468.5 Methods of Staff Appraisal 2488.6 The Audit Manual 2508.7 Time Monitoring System 2528.8 Audit Planning Process 2538.9 The Annual Audit Plan 2558.10 The Quarterly Audit Plan 2558.11 New Developments 256Summary and Conclusions 261Endnotes 2629 Audit Fieldwork 263Introduction 2639.1 Planning the Audit 2639.2 Interviewing Skills 2709.3 Ascertaining the System 2759.4 Evaluation 2789.5 Testing Strategies 2829.6 Evidence and Working Papers 2909.7 Statistical Sampling 2929.8 Audit Testing and Statistical Sampling 2969.9 Reporting Results of the Audit 2979.10 Structuring the Audit Report 3049.11 Audit Committee Reporting 3069.12 New Developments 308Summary and Conclusions 311Endnotes 31410 Meeting the Challenge 315Introduction 31510.1 The New Dimensions of Internal Auditing 31510.2 The Audit Reputation 31610.3 Globalization 31810.4 Providing Audit Assurances 31910.5 Meeting the Challenge 326Summary and Conclusions 327Endnotes 329Appendix A Auditing the Risk Management Process: A Case Study 331Index 359