Actualiteit

In a properly balanced and structured corporate governance framework, the Audit Committee (AC), the Interne Audit Function (IAF) and the external accountant (EA) rely on each other. The IAF is increasingly seen as an essential element of the organisation’s governance. The IAF supports the AC by providing insight into and assurance about the design and effectiveness of the governance, the risk management and the internal control measures. The AC is in a position to create the correct prerequisites and conditions for the IAF that optimise the IAF’s independence and objective functioning and promote the complementary functioning of the IAF and the EA. The relationship between the AC and the IAF was first formalised in the original Dutch Corporate Governance Code (the Code) in 2003. Five years later, the Royal Netherlands Organisation of Chartered Accountants (NBA) (then NIVRA) and the Institute of Internal Auditors Netherlands (IIA) surveyed the practice at the time and published the findings and best practices in ‘Allies in Governance’ (2008). In the spring of 2016, the IIA and the NBA jointly set up a working group to look anew at the relationship between the AC and the IAF. In connection with the proposal to revise the Code, in which the AC, IAF and EA triangle features prominently, the working group also focused on the relationship between the IAF and the EA. The main conclusions from the survey are: The formal relationship between the AC and the Chief Audit Executive (CAE) is generally well structured. This relationship is defined in the IAF charter. Most ACs are aware of the importance of appointing a qualified CAE. They are therefore also involved in their appointment or dismissal. This involvement can be further improved if every chair of an AC has an interview with the prospective CAE prior to the latter’s appointment. Almost all the ACs (80%) are involved in assessing the CAE. This improves his functioning because his objectivity is better guaranteed if his performance appraisal is not only prepared by people directly involved. The CAE is seen as a valuable discussion partner and, in most organisations, is present at the entire AC meeting. This enables the CAE to share insights with the AC, also in areas that he has not (yet) studied. It also gives the CAE important information that he requires in fulfilling his job. In most organisations, the chairs of the AC and CAE have bilateral discussions several times a year, which strengthens the independence and the bond of trust. To function optimally as ‘trusted advisor’ to both the chair of the board and that of the AC, transparency about the content of these discussions is essential. The AC discusses the audit plan and the available resources. Changes in the audit planning are discussed annually (at least) with the CAE. Restricting the available resources has an impact on the choices that have to be made when preparing the audit plan. It is important that the AC understands which risks cannot be covered with the available resources. Better insight by the AC can result in adaptation of the available resources in order to achieve the desired audit coverage. The AC can strengthen the assessment of the effectiveness of the IAF by agreeing a wide range of KPIs in consultation with the CAE. The IAF’s quality control and improvement programme has to be part of it. Given the increasing relevance of culture and conduct as part of the organisations’ governance, ACs should discuss the audit approach in this field with the CAE. Not all CAEs currently feel themselves up to the task of picking up this gauntlet. The IIA and the NBA should offer the members support in this area by assisting them in developing an approach through training and publications. In view of the proposal to revise the Code, there should be a new approach to the collaboration between the IAF and EA, centred on the question of where they encounter and complement one another in the overall field of financial and non-financial information. Optimisation of the relationship between the IAF  and the EA and opportunities to improve the organisation’s governance in partnership should be put on the AC’s agenda. An option is to report jointly each year to the board and the AC on the design, existence and operation of the governance and the risk management and internal control systems.

The Institute of Internal Auditors’ (IIA’s) 2015 Global Internal Audit Common Body of Knowledge (CBOK) Practitioner Survey reveals that women make up a large portion of the internal audit profession around the world; however, women still face considerable challenges as they navigate through their careers in internal auditing. This report has two goals: To describe how women currently fit into the internal audit landscape around the world, based on results from the 2015 CBOK Practitioner Survey To share perspectives and advice for achieving success as a woman in the internal auditing profession, using interviews and roundtable discussions conducted with chief audit executives (CAEs) from around the world The 2015 CBOK survey revealed several important differences between men and women in internal auditing that may tend to influence career success. On average, women self-assessed themselves lower in all 10 of the core competencies defined in The IIA’s Global Internal Audit Competency Framework, especially early in their careers. Female participants were also less likely than men to diversify their expertise, either through formal education or through attainment of professional certifications. There were also notable differences in the tools used by male and female CAEs to assess internal audit quality. Men and women were equally likely to report having a well-defined quality assurance and improvement program (QAIP); but on average, the men were significantly more likely to report the use of balanced scorecards, surveys of audit clients, and peer reviews to assess the quality of their internal audit functions. Especially at larger organizations, the CBOK survey data indicates that top management positions in internal auditing are more often held by men than by women. But while there is a distinct “gender gap” in internal auditing, that gap seems to be narrowing. On average, the women who participated in the survey held lower-level positions than the men, but they were also generally younger than their male counterparts. This suggests that as the relatively younger female workforce ages, the number of women moving into senior positions in internal auditing may increase.

This report provides an overview of results from the 2015 Global Internal Audit Practitioner Survey regarding The Institute of Internal Auditors’ (IIA’s) International Standards for the Professional Practice of Internal Auditing. The Standards represent minimum expected requirements that normally should be found in all internal audit functions. They provide a foundation for performing efficiently and effectively, and are intended for use wherever internal auditing is practiced. Yet despite the fact that conformance to the Standards is mandatory for all members of The IIA and for all Certified Internal Auditors (CIAs), the survey found significant levels of nonconformance. Almost half of surveyed chief audit executives (CAEs) report that they do not use all the Standards, and fewer still say that they are in conformance with the Standards. An underlying objective of the Standards is to ensure that internal audit is effective, of high value, and of high and consistent quality. Nonconformance undermines this objective, and significant levels of nonconformance are detrimental to the image and reputation of the internal audit profession. Fortunately, the CBOK survey also found that significant progress is being made toward more consistent conformance. The CBOK 2015 Global Internal Audit Practitioner Survey found: While use of the Standards is increasing, almost half of CAEs still report that they do not use all of the Standards. Auditors holding internal audit-related professional certifications use the Standards more often than auditors without such certifications. Members of The IIA use the Standards more often than nonmembers. Standards use is more likely in highly regulated industries than in less-regulated industries, and more likely in publicly traded organizations than in privately owned organizations. Use of all of the Standards is higher in the regions of North America, Europe, and Sub- Saharan Africa than in other parts of the world. More work may be needed in learning to apply the Standards and other elements of The IIA’s International Professional Practices Framework (IPPF) effectively. Almost a quarter of internal auditors evaluate themselves as being below the competent level in applying the IPPF to their work. Use of the Standards may be particularly challenging for internal auditors working at smaller internal audit departments. Auditors in one- to three-person departments use all of the Standards at a rate of 6% to 18% below the global average. Other reasons given for nonconformance include lack of board/management support, lack of perceived benefit compared to cost, and impacts on conformance caused by government regulations or standards.

Smart devices, such as cell phones and tablets, offer truly mobile and convenient options for working remotely. Like any new or expanding technology, smart devices also introduce additional risks for organizations. Internal auditing’s approach to assessing risks and controls related to smart devices is evolving as new technologies emerge and the variety of devices increases. To meet these challenges, internal auditors are tasked with: Understanding the organization’s smart device strategy. Evaluating the effect of smart device technology on the organization. Providing assurance over the smart device environment by: - Identifying and assessing risks to the organization arising from the use of such devices. - Determining the adequacy of applicable governance, risk management, and controls related to such devices. - Reviewing the design and effectiveness of related controls. Chief audit executives (CAEs) should have a thorough understanding of the opportunities and threats that smart devices present to the organization and the internal audit activity. The internal audit activity can support management’s efforts to mitigate risks associated with the use of smart devices. This guidance should help internal auditors better understand the technology, risks, and controls associated with smart devices. Appendix C provides an engagement work program, including a risk assessment, designed specifically to evaluate risk management and controls related to smart devices.

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