Enhancing Public Sector Internal Audit: Standards, Stakeholders, and Value

1. The Internal Audit Function in the Public Sector Seeuws Katleen

2. Presentation Content • Internal Audit Standards • Definition of Internal Audit • Purpose of InternalAudit • Internal Audit Stakeholders • Content of InternalAudit Services • KeyApectsforAdding Value • Centralized versus DecentralizedStructure • CurrentDevelopments • Conclusions

3. International Audit Standards • Mandatoryandstronglyrecommendedguidance • - Definition • - International Standards • - Code of Ethics • PerformanceandAttributeStandards • (IPPF – Institute of Internal Auditors)

4. Definition of Internal Audit • Internal audit is an independent and objectiveassurance and consulting activity designed to add value and improve the organisation’s operations. • It helps the organisation in achieving its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the risk management, control and governance processes. • (IPPF – Institute of Internal Auditors)

5. Purpose of Internal Audit Independent Objective Accomplishobjectives Risk, control, governance Systematic approach Evaluation Professional judgement Competence Quality Control ADDED VALUE

6. Internal Audit Stakeholders

7. Content of Internal Audit Services • Assurance services Opinion or conclusion • Consultancy services  Advise • Opinion or adviceon: • - Controls • - Risk management • - Governance

8. KeyAspectsforAdding Value • Independence andobjectivity • Relationwith management • Control environment • Audituniverseand scope • Qualitiyassuranceandmethodology • Resources

9. Independence • Standards – legalframework - Auditcharter • Positionwithin the organisation • Public accesstoreports • Recources • Auditplanning • Presence of anAudit Committee • Objectivity → auditors • Selection, evaluationanddismissal • Formation – certification • Ethicalcode

10. Relationwithmanagement • Confidentiality • Auditplanning considers management concerns • Reporting • Facilitatesaccountability

11. Audituniverseand scope • Limitations in legislativeframework • Maturity level of internal control • Types of audits: • - Performance audit • - Compliance audit • - Financial audit • - Operational audit (incl. IT audit) • - System audit (financial and non financial) • - Due diligence audit • Crosscuttingprocesses • Fraudeinvestigations

12. Resources • Scarcerecources, efficiency considerations • Staff • - Presence of qualifiedandspecializedstaff • - Mobility • - Rotationobligation • Outsourcing

13. QualityAssurance • Internalandexternalevaluations • StandardsandEthical Code • Efficiencyandeffectiveness of Internal Audit • Measure performance • ImproveInternal Audit activities

14. Centralized versus DecentralizedStructure • Strategicandpoliticalchoice • (effectiveness versus efficiency) • Centralized or decentralizedpolicy execution • Positioncloseto the highest executive level

15. Attentionareas

16. Currentdevelopments • New technologies • Comprehensive audit • More focus on risk management and governance • Use for strategic planning

17. Conclusions • Importance of the Standards • Focus on adding value • Adequate fulfillment of key aspects • Internal role as a business partner • Be aware of changing conditions

18. Thankyouforyour attention ! Anyquestions…