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Internal Audit Process

Internal Audit Process. Credit Union Internal Auditing from the Ground Up John Gallagher , Director Internal Audit SEFCU (New York) Barry Lucas, Internal Auditor Desco FCU (Ohio) Pat Richey , Director Internal Audit

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Internal Audit Process

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  1. Internal Audit Process Credit Union Internal Auditing from the Ground Up John Gallagher, Director Internal Audit SEFCU (New York) Barry Lucas, Internal Auditor Desco FCU (Ohio) Pat Richey, Director Internal Audit Finance Center FCU (Indiana) ACUIA Conference 6/14/2011

  2. Serving Many Masters Internal Audit Definition Internal auditing is an independent, objective assurance andconsulting activity designed to add value and improve anorganization's operations. It helps an organizationaccomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve theeffectiveness of risk management, control, and governanceprocesses. ACUIA Conference 6/14/2011

  3. Serving Many Masters Role • Independence and Objectivity • Assurance and Consulting • Add Value and Improve Services • Systematic and Disciplined • Reporting Structure ACUIA Conference 6/14/2011

  4. Board Committees (ALCO, Governance, CEO Compensation) Board of Directors (13 members) Supervisory Committee (4 Members) CUSOs President/CEO Internal Audit Chief Administrative Officer Chief Financial Officer Chief Banking Officer Chief MarketingOfficer President Commercial Services Chief Technology Officer ORM Accounting Finance Branch Network Marketing Commercial Lending IT HR Collections Call Center e-Services Business Accounts Facilities Ops Support Lending CRM SEFCU Organizational Chart Members

  5. ACUIA Conference 6/14/2011

  6. ACUIA Conference 6/14/2011

  7. Serving Many Masters Responsibilities • Internal Audit Charter • Supervisory/AuditCommitteeCharter • Job Descriptions • Audit Staff Structure ACUIA Conference 6/14/2011

  8. Serving Many Masters Relationships and Politics • Management • Employees ACUIA Conference 6/14/2011

  9. Serving Many Masters Relationships • Supervisory & Audit Committees • Board of Directors ACUIA Conference 6/14/2011

  10. Serving Many Masters Relationships • External Auditors • Regulators ACUIA Conference 6/14/2011

  11. Serving Many Masters QUESTIONS ? ACUIA Conference 6/14/2011

  12. Performing Audit Work Where Do I Start? Risk Assessment Audit Universe Models Risk Priority ACUIA Conference 6/14/2011

  13. Performing Audit Work Where Do I Start? • Business/Audit Plan ACUIA Conference 6/14/2011

  14. Performing Audit Work Where Do I Start? • Audit Scheduling • Distractions • Fraud Investigation • New Products / Services • Training / Vacations • Turn over ACUIA Conference 6/14/2011

  15. Performing Audit Work • Objectives - broad statements - risks • Scope • - who • - what • - when • - where ACUIA Conference 6/14/2011

  16. Performing Audit Work • Audit Program - written procedures - interview questions - collecting information - testing, sampling - analyzing - evaluation ACUIA Conference 6/14/2011

  17. Performing Audit Work • Workpapers - support findings - restricted access - retention - testing, sampling - analyzing - evaluation ACUIA Conference 6/14/2011

  18. Performing Audit Work QUESTIONS ? ACUIA Conference 6/14/2011

  19. Communications and Follow Up Audit Reports Management & Internal Audit need to agree up front • Findings • Recommendations • Report Structure • Who gets them? ACUIA Conference 6/14/2011

  20. Communications and Follow-Up Follow-Up • Follow-up Audits • Monitoring results • Implementation of recommendations If you do not do this – Nothing happens! ACUIA Conference 6/14/2011

  21. Communications and Follow-Up Supervisory / Audit Committee Meetings • Frequency • Structure • Agenda ACUIA Conference 6/14/2011

  22. Communications and Follow-Up QUESTIONS ? ACUIA Conference 6/14/2011

  23. Tools and Resources Technology • Paperless auditing • Internet tools • Analytical review using audit software ACUIA Conference 6/14/2011

  24. Tools and Resources Credit Union Objectives - Operations - Financial Reporting - Compliance Basic Internal Controls - COSO • Internal Control Components - Control Environment - Risk Assessment - Control Activities - Information and Communication - Monitoring ACUIA Conference 6/14/2011

  25. Tools and Resources Credit Union Objectives - Operations - Financial Reporting - Compliance - Strategic Enterprise Risk Mgmt - COSO • ERM Components - Internal Environment - Objective Setting - Event Identification - Risk Assessment - Risk Response - Control Activities - Information and Communication - Monitoring ACUIA Conference 6/14/2011

  26. Tools and Resources International Standards for the Professional Practice of Internal Auditing - Attribute Standards - Performance Standards - Quality Assurance Review ACUIA Conference 6/14/2011

  27. Tools and Resources Control Self-Assessment • Management Buy In • Business Objectives • Identify Risks • Gather Best Practices • Provide Documents ACUIA Conference 6/14/2011

  28. Tools and Resources Resources • Professional Journals - IIA, ACFE, ISACA • Professional Standards - COBIT - GTAGs • Current Issues of Internal Auditing – Governance • Websites - Credit union industry, regulatory, professional ACUIA Conference 6/14/2011

  29. Audit Professionalism • Certification - CIA – Common Body of Knowledge - CFE - CUCE, NCCO - CISA - CPA - CFSA ACUIA Conference 6/14/2011

  30. Audit Professionalism • Training - Conferences / Seminars - Local Chapters - Webinars / Teleseminars - Compliance Schools ACUIA Conference 6/14/2011

  31. Audit Professionalism • ACUIA • Website • Message Forum • Membership Directory • Audit Guide • The Audit Report magazine • Lending Library • Conferences, seminars ACUIA Conference 6/14/2011

  32. Tools and Resources QUESTIONS ? ACUIA Conference 6/14/2011

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