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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 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
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
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
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
Serving Many Masters Responsibilities • Internal Audit Charter • Supervisory/AuditCommitteeCharter • Job Descriptions • Audit Staff Structure ACUIA Conference 6/14/2011
Serving Many Masters Relationships and Politics • Management • Employees ACUIA Conference 6/14/2011
Serving Many Masters Relationships • Supervisory & Audit Committees • Board of Directors ACUIA Conference 6/14/2011
Serving Many Masters Relationships • External Auditors • Regulators ACUIA Conference 6/14/2011
Serving Many Masters QUESTIONS ? ACUIA Conference 6/14/2011
Performing Audit Work Where Do I Start? Risk Assessment Audit Universe Models Risk Priority ACUIA Conference 6/14/2011
Performing Audit Work Where Do I Start? • Business/Audit Plan ACUIA Conference 6/14/2011
Performing Audit Work Where Do I Start? • Audit Scheduling • Distractions • Fraud Investigation • New Products / Services • Training / Vacations • Turn over ACUIA Conference 6/14/2011
Performing Audit Work • Objectives - broad statements - risks • Scope • - who • - what • - when • - where ACUIA Conference 6/14/2011
Performing Audit Work • Audit Program - written procedures - interview questions - collecting information - testing, sampling - analyzing - evaluation ACUIA Conference 6/14/2011
Performing Audit Work • Workpapers - support findings - restricted access - retention - testing, sampling - analyzing - evaluation ACUIA Conference 6/14/2011
Performing Audit Work QUESTIONS ? ACUIA Conference 6/14/2011
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
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
Communications and Follow-Up Supervisory / Audit Committee Meetings • Frequency • Structure • Agenda ACUIA Conference 6/14/2011
Communications and Follow-Up QUESTIONS ? ACUIA Conference 6/14/2011
Tools and Resources Technology • Paperless auditing • Internet tools • Analytical review using audit software ACUIA Conference 6/14/2011
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
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
Tools and Resources International Standards for the Professional Practice of Internal Auditing - Attribute Standards - Performance Standards - Quality Assurance Review ACUIA Conference 6/14/2011
Tools and Resources Control Self-Assessment • Management Buy In • Business Objectives • Identify Risks • Gather Best Practices • Provide Documents ACUIA Conference 6/14/2011
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
Audit Professionalism • Certification - CIA – Common Body of Knowledge - CFE - CUCE, NCCO - CISA - CPA - CFSA ACUIA Conference 6/14/2011
Audit Professionalism • Training - Conferences / Seminars - Local Chapters - Webinars / Teleseminars - Compliance Schools ACUIA Conference 6/14/2011
Audit Professionalism • ACUIA • Website • Message Forum • Membership Directory • Audit Guide • The Audit Report magazine • Lending Library • Conferences, seminars ACUIA Conference 6/14/2011
Tools and Resources QUESTIONS ? ACUIA Conference 6/14/2011