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Managing the relationship between internal audit, external audit and the board

Managing the relationship between internal audit, external audit and the board. A Presentation to ICPAK Annual Internal Audit Seminar 2016 by FCPA(K) Eric Kimani, MBS. CREDIBILITY STATEMENT. 25 years Boardroom experience Ex –CEO KTDA/Sameer, Finance Director, Internal Auditor

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Managing the relationship between internal audit, external audit and the board

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  1. Managing the relationship between internal audit, external audit and the board A Presentation to ICPAK Annual Internal Audit Seminar 2016 by FCPA(K) Eric Kimani, MBS Eric Kimani@Harvestconsulting

  2. CREDIBILITY STATEMENT • 25 years Boardroom experience • Ex –CEO KTDA/Sameer, Finance Director, Internal Auditor • Chair, Various Board Audit Committees, • FCPA(K), CPS(K), LLB (Laws), Advocate Eric Kimani@Harvestconsulting

  3. PRESENTATION OUTLINE • Define the relationships • The key issues • What is the ideal position • Practical suggestions/Global trends • Summary & Call to Action Eric Kimani@Harvestconsulting

  4. The Relationship Defined • Distinct roles defined/ explained • Complimentary roles explained • Board Audit Comm. = affirming role • Internal= Assurance • External= Audit opinion • Where is the nexus of Roles? Eric Kimani@Harvestconsulting

  5. The Relationship Defined (Cont.) • Board Audit-Manage relationship • Supporting role of BAC-Oversight • Referee vs. External, Management • Ensure common value to entity • Affirm Internal Audit role • Ensure independence Eric Kimani@Harvestconsulting

  6. The Key Issues • We do not report to you • Your work is not exhaustive • We know better • We add value to business • We have the force of the law Eric Kimani@Harvestconsulting

  7. The Key Issues (Cont.) • You can rely on my work • We relied and failed • You are part of management • You don’t have enough evidence • You did not consult enough Eric Kimani@Harvestconsulting

  8. Global Trends • Emphasis on cooperation • Emphasis on separation of roles • Quality assurance • Training • Continuous communication Eric Kimani@Harvestconsulting

  9. Practical Case Study • The practice at XYZ Co. • Length of meeting • Frequency (4+2) • Content/Salary content • Follow up/ARP’s Eric Kimani@Harvestconsulting

  10. What Does a Successful relationship look like? • Mutually affirming • Mutual respect • Complimentary • Value adding • Issue-based Eric Kimani@Harvestconsulting

  11. Summary • IA should ideally sit in BRC, etc. • Power vested in BAC must be final • BAC may call for external help or more info • IAIA –Independent assessment recommended every 5 years. Preferably not EA. Eric Kimani@Harvestconsulting

  12. Call to Action • Let it be a love, love relationship that is mutually affirming. • Share info but stay independent. • The truth shall set you free- be fair and just Eric Kimani@Harvestconsulting

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