Course Outline

Risk and internal audit overview

• Definition of risk
• Types of risk in an organization
• Functions of management: planning, organizing, implementing and controlling
• Defining internal audit
• Internal audit as a function of corporate governance
• Scope and building blocks of corporate governance
• Reasons to have an internal audit function
• Distinguishing internal from external auditing
• Scope of internal auditing: the internal audit charter
• Staffing the internal audit function
• Role of audit committee

Internal audit standards

• Attribute standards
• Performance standards

Types of internal auditing

• Performance auditing
• Operational auditing
• Financial auditing: accounting cycles audited by the internal audit function
• Compliance auditing
• 20 questions directors should ask about the internal audit function

Internal audit implementation: fieldwork guidelines

• Information gathered by internal auditors
  • 4 qualities of information
  • Sources and nature of information
  • Assessing the degree of persuasiveness
• Types of engagement procedures
  • 15 internal audit test tools
  • Observation
  • Interviewing: a disliked technique
    • Interviewing skills: how to run a successful interview
    • Role play: internal auditor in action
  • Examining records
    • Verification and confirmations
    • ?Vouching and tracing
    • Re-performing
• Internal audit working papers
  • Best practices for managing working papers
  • Retention policies
• Communicating fieldwork results and recommendations
  • Legal considerations for communicating results
  • 4 attributes of an observation or recommendation
  • Disseminating results and exit meetings

The fieldwork: risk-based auditing

• Defining management assertions
• Risk assessment process
  • Reason for risk based audit planning
  • Evaluating risks
  • Techniques to identify the auditable units
    • Criteria for selecting auditable units
    • Scoring and weighing risks
  • Prioritizing risk and developing audit plan
  • Methods to generate list of risks
• Identifying entity level controls to mitigate risks
  • Broad definition for types of controls
  • Essential components of effective internal control system: 'COSO' model
  • Criteria for unsatisfactory rating for control components
  • Methods to generate list of controls
    • Insights on flowcharting for understanding cycles and controls
• Testing of internal controls
  • Design and implementation of an internal control
  • Operating effectiveness of an internal control
• Tips and tools for audit sampling

Fraud

• Definition and characteristics of fraud
• Internal auditor’s role in a fraud case