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PEM PAL Internal Audit Community of Practice (IACOP)Plenary Meeting on Increasing the Value and Impact of Internal Audit in the Public SectorAudit Marketing (promotion of internal audit, the products, and the value added)Dr. Hannes Schuh, Chief Audit Executive, Federal Ministry of Finance, Austria
Dr. Hannes Schuh Federal Ministry of Finance Austria hannes.schuh@bmf.gv.at Chief Audit Executive of the Federal Ministry of Finance Spokesman of the Board of Auditors of the European Patent Organisation Author and editor (accounting, tax auditing and internal audit) Member of the Board of the Institute of Internal Auditors Austria (2006-2015) Lecturer at a University of Applied Sciences (2010-2015) AL | AT | AZ | BA | CN | DE | DK | FI | FR | GB | GE | HR | HU| IE | IT | PL | PT | RO | SE | SK | UA | US | ZA |
Agenda Audit Marketing • IA-Strategy of Ministry of Finance (basics) • Some general marketing aspects • Internal Audit as a brand • Product examples • Presentation of value added
IAS strategy • The strategic linkages between entity and IAS
IAS strategy The own strategy of the IAS linked to the administration and its dynamic development Strategic dimensions • The IA Staff is prepared to do its work. • The IA processes are standardized and result-oriented. • The IA unit takes care on its environment. • The IA activities lead to improvements. Strategic directions (”strategy map”) • The IAS creates value added for its entity. • The IAS cooperates with the management for the entity´s organisational fit for future. • The IAS is well known for its quality of work. • The IAS improves its maturity.
Audit universe • Management and Organisation: What does the organisation want? • Operations: What does the organisation actually do? • Self reflexion: How well does the organisation know itself? • Changes and projects: How well does the organisation implement changes? • External Environment: How is external environment handled by the organisation? • Megatrends: How does the organisation react on megatrends?
Key questions for IAS • Does the organisation work well? • Does the organisation implement changes well? • Is the organisation fit for future?
Definitions American Marketing Association, 2004 • „Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.“ Ph. Kotler: • Marketing is getting the right goods and services to the right people at the right place at the right time at the right price with the right communication and promotion.
Trade-off In general, Internal Marketing can be understood as a scheduled arrangement of trade-offs between internal coalition groups. Source: Prof. Dieter Scharitzer, WU
Audit marketing? • Audit marketing is part of internal marketing. • For Internal Audit the trade-off can be seen as exchange of high quality IA services and a further development of the organisation. • GIVE INFORMATION – GET IMPROVEMENT !!! Key questions of audit marketing? • Which products (services) can be offered by IAS? • What is the trade-off between IAS and the organisation? • Which marketing instruments can be used to improve acceptance and effects of IAS?
Products and market situation • Audit, advise and information are services of the Internal Audit, intended to support the organisation in meeting their targets and to improve the organisational fit for future.
Trade-off, the 7 „Ps“ • Product (audit, advise, information) • Price (value added regarding improvement) • Promotion (to solve difficult engagements in the best possible way; qualitative access – not more but better) • Place (determined by kind of product and distribution channel) • People (providing the service & the customer as „external“ factor) • Physical environment, tangibles • Process elements
Overview • Strategy : „IA is designed to add value to the organisation“ • Presentations (a broad variety of occasions!) • Experts: strategic knowledge map, presentation of knowledge skills and learning success of staff, behaviour in public • Corporate IA Design (in accordance with CD, but visible differenciation) • Product: audit • Product: advise • Product: information
Corporate Design • CD- applicable for all IA-documents, e.g. Annual reports Start Up - Papers Studies/ Advice….
Annual report, start-up paper, audit report, feedback questionnaire Product Examples
Annual report Addressed to • Minister • Secretary of State • Secretary General • General Directors and Deputy General Directors • (Some) directors • Supreme Audit Court
Annual report - Cover “Quote of the year” Motto of the year
Annual report - Structure • Summary • Statement of independency (signed - by CAE) according IIA 11101, INTOSAI Gov 9140 • Position of IAS • Duties, competencies • IAS-strategy • Organizational chart • Legal position • Administrative developments • Communication and information
Annual report - Structure • Internal development • Staff • Training • Internal experts • Infrastructure • Indicators • Performance indicators • Results of feedbacks • Audits • Risk map • Annual plan • Cases (2-3 pages per case) • Audit results (recommendations, covenants)
Annual report - Structure • National and international cooperation • Cooperation in the MoF • Cooperation with other ministries and public entities • (incl. universities and Institute of Internal Auditors Austria) • International networking • Prospect to subsequent year • Annex(es) • Audit Charter • In total around 90 pages.
Products of an audit engagement • Information (brochure) on audit procedure • Information at first meeting with audit client about audit goals, audit methods and time table • Finalisation of audit work (preparatory document, final meeting, draft report) • Final report • Content, incl. (if necessary) introduction in audit issue • Kind of presentation, very important: summary !! • Distribution channel • Communication for quality and effectivity assurance • Feedback questionnaire • Informal contacts of CAE with managers • (Follow Up Audit)
Audit procedures – Start up paper Cover Brief information on Internal audit Audit procedures Audit issues Time schedule Support needed
Audit report Cover Distribution list • Audit reports - Layout List of graphs and tables Table of contents 31
Audit report – Management Summary Management Summary Headline gives a first overview, arouses the interest of the reader, shows (sometimes) an overall opinion, is comparable to the initial paragraph of an article in a news paper, …. Indicates the subsequent paragraph and gives an evaluation Describes the findings and evaluations of an issue in a very concise way. Includes sometimes small graphs. Does not necessarily follow the structure of the report. Is the 3rd level of information (after overall headline and headline of paragraphs) for readers in a hurry. All in all a description system which is better than traffic lights. Et cetera, et cetera. In total the management summary should not be longer than 2-3 pages, usually it has 1,5 - 2 pages. In general there are not more than 5-7 paragraphs. They should show the most important messages for the top management. Headline Headline of paragraph Paragraph
Audit report – connection to audit plan; audit procedure What ? Where and when ? Final meeting, when and Who?
Audit report – audit target; audit methods used Audit target Audit methods used
Audit report – text Findings Evaluation Recommendations
Audit report – evaluation and covenants Evaluation: presentation of the whole results in a “big picture” at the end of the report 1-2 pages Covenant (“To-do-list”) Who has to do what until when ?
Feedback QuestionnaireIAS (after every audit) (1/2) • Was the audit scope communicated in a clear and timely manner? • Was the audit performed in a reasonable time? • Was your daily activity reduced in the lowest possible way? • Was your business model and your strategy considered in an appropriate way? • Have you been informed on the status and interim results during the audit? • Did the auditors show professional knowledge in the audited fields? • Do the auditors have sufficient practical knowledge? • Are the conclusions conclusive and well documented? • Are the findings reported properly? • Was the report written clearly and understandable? • Are the recommendations constructive and practicable? • Has the final meeting been prepared well and hold efficiently and professionally?
Feedback QuestionnaireIAS (after every audit) (2/2) • Did the auditors contribute to good cooperation? • Did the audit lead to an added value in general? • Was the start-up meeting informative regarding the understanding of audit scope and audit process? • Have all questions about findings been clarified at the end of the field audit? • Have you been informed timely and sufficiently in preparation of the final meeting? • Was the final meeting done efficiently? • Was the time sufficient to send remarks on the draft report?
Quarterly report to the Minister Information about • Audits finished at reporting period (including overall evaluation) • Ongoing audits • Next audits • Statistical data • Covenants • Implementations • Partial implementations • Non-implementations • Ongoing The quarterly report is completed by a quarterly meeting!!
Quantitative and qualitative indicators Presentation of Value Added
Performance indicators • Ressorces • Field audit ratio • Day per audit
Feedbacks • 16 questions • Grading 1 (best) – 4 • Shown: • Average • Median • Minimum • Maximum
Recommendations • Strategic relevance • Implementation • Delay of implementation
External Quality Assessment(Benchmarking) • Methodology (here: EY) • Result Leading Advanced Established Developing Basic
