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British Computer Society NORTH LONDON BRANCH AudIT to BenefIT - 6 sides of the dice Wednesday 16th January 2008, 18.30 – 20.30 1 topic, 2 hours, 4 sponsors.

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Presentation on theme: "British Computer Society NORTH LONDON BRANCH AudIT to BenefIT - 6 sides of the dice Wednesday 16th January 2008, 18.30 – 20.30 1 topic, 2 hours, 4 sponsors."— Presentation transcript:

1 British Computer Society NORTH LONDON BRANCH AudIT to BenefIT - 6 sides of the dice Wednesday 16th January 2008, 18.30 – 20.30 1 topic, 2 hours, 4 sponsors 6 views, 6 expert presenters 1 great audience

2 British Computer Society NORTH LONDON BRANCH Are You an Auditor?

3 British Computer Society NORTH LONDON BRANCH 4 Sponsors: * Gotham Digital Science www.gdssecurity.com *www.gdssecurity.com * ISACA London Chapter www.isaca-london.org *www.isaca-london.org *IT Faculty of the Institute of Chartered Accountants in England and Wales www.icaew.com/itfac*www.icaew.com/itfac* * SUPINFO The International Institute of Information Technology www.supinfo.com/uk *www.supinfo.com/uk

4 British Computer Society NORTH LONDON BRANCH 6 Views – plus more! [Target start time 18.30] BCS NLB Intro [10 mins.] - Dalim Why audit? Who needs it? [15 mins.] - Justin What does the auditor do? [15 mins.] - Nick What’s audited? [20 mins.] - Fraser IT audit tools and techniques [15 mins.] - Martin How auditors use COBIT & IT Assurance Guide [15] Lynn How to plan to get value from your audits [15] - Steven BCS NLB end of formal event [10 mins.] - Dalim [Target end time 20.30] Informal networking (with food & drink) ALL

5 British Computer Society NORTH LONDON BRANCH 6 Expert Presenters [MC] Dalim Basu, BCS NLB 1.FRASER NICOL, Ernst & Young 2.JUSTIN CLARKE, Gotham Digital Science 3.LYNN LAWTON, ISACA 4.MARTIN ALLEN, PwC 5.NICK FELLOWS, Barclays Plc 6.STEVEN BABB, KPMG & ISACA [Supporting Cast: NLB team for this event] Jude Umeh, Patrick Roberts, Rebecca King

6 ©2007 Gotham Digital Science Ltd Why audit? Who needs it? Justin Clarke, Director CISA, CISM, CISSP, A.Inst.ISP

7 7 ©2007 Gotham Digital Science Ltd What is an audit?  Anyone?  A Definition  An audit is a professional, independent examination of a company's financial statements and accounting documents according to generally accepted accounting principles (Traditional)  an evaluation of a person, organization, system, process, project or product. Audits are performed to ascertain the validity and reliability of information, and also provide an assessment of a system's internal control (Wikipedia)

8 8 ©2007 Gotham Digital Science Ltd Understanding your auditor  Internal or External?  Assurance or Audit?  Key ideas –Independence –Reasonable assurance –Material error –Evidence –Testing/Sampling

9 9 ©2007 Gotham Digital Science Ltd Why audit?  Mitigate risk  Regulatory/legal - financial  Measurement/management –Conformity/Compliance –Quality –Environmental  How are we doing?

10 10 ©2007 Gotham Digital Science Ltd Who needs it?  Organisations –Large and small –Private, public and government  Stakeholders –Shareholders –Management –Tax payers

11 11 ©2007 Gotham Digital Science Ltd Types of audit  External – ITGC, ITAC, SAS70  Internal – Operational, Business Process, CobIT, COSO  Regulatory - Sarbanes Oxley, Basel II, MiFID  Conformity/Compliance – ISO17799/27001  Quality – ISO9001  Environmental – ISO14001

12 12 ©2007 Gotham Digital Science Ltd Contact

13 Exploring the world of Internal Audit What does the auditor do and why? Nick Fellows, CISA - Audit Manager 16 January 2008

14 Agenda The Audit Charter The Audit Universe and the Audit Plan This audit

15 The Audit Charter This is a document that defines the Internal Audit function Its purpose, responsibility, authority and accountability. What we are there to do How we will maintain our independence and objectivity How we will do it and conduct ourselves whilst doing it The relationship between IA and its stakeholders The KPIs, what they are and how they are measured Standard S1 and Guideline G5 for Audit Charter can be found on the ISACA website www.isaca.org

16 The Audit Universe and the Audit Plan How does the audit department work out what to do? Populate the audit universe Prioritise based on risk ranking Plan Agree with stakeholders and get sign off from the Board Audit Committee

17 The audit Understanding the processes, working out the key controls. The ‘intention to audit’. Testing the controls. And the consequence was… The report and follow up actions.

18 Closing thoughts Risks are mitigated by controls. Whose controls? – yours. An audit is not something that is done to you. It is something that is done with you. The more you prepare, the less painful the review will be.

19 What is Audited? Fraser Nicol – Technology Security and Risk Services, Ernst and Young AudIT to BenefIT Presentation to British Computer Society INSTRUCTIONS: This template is designed for projected documents that will be presented to an audience. The one template offers a choice of 5 different colour palettes with either a dark or white background. On presentations projected directly from a computer, it is preferred for the background to be dark blue. How to change colour palette Format > Slide Design > Color Schemes Update the cover page The Service Line flag and Date on the cover page should be updated in the Header & Footer menu at the start of each new presentation. Go to View menu Select Header & Footer... Update the SERVICE LINE and Date 2007 with the appropriate information Select Apply to All

20 IT audit – who, why, what and how? Internal auditing – is an independent, objective assurance and consulting activity designed to add value and improve an organisations operations External auditing – is an independent opinion on whether or not financial statements are relevant, accurate, complete, and fairly presented Both approaches are characterised by a systematic approach to the evaluation of risk management, control and governance processes. A common industry standard for IT auditing is: COBIT 4.1 – Control Objectives for Information and Related Technology. Set of leading practises (framework) for information technology (IT) management. Created and governed by Information Systems Audit and Control Association (ISACA). COBIT is organised into 4 domains: –Plan and Organise –Acquire and Implement –Delivery and Support –Monitor and Evaluate

21 ME - Monitor and Evaluate DS - Delivery and Support AI - Acquire and Implement Cross Domain Reviews Who audits what? PO - Plan and Organise IT Strategic Alignment Online Sales Application Project Third Party Managed Services IT Project Managemen t IT Risk Management Network Management Review Data Centre Management Review Expect Internal Audit Focus Expect External Audit Focus IT Procuremen t SDLC Change Management Application Review DRP / BCP System Security IT Control Operation Software Licensing KPI / SLA Review

22 Example IT risk identified 1.IT Infrastructure Scalability 2.Exploitation of Security Vulnerabilities 3.IT Strategy not formulated 4.IT Upgrade Activities lead to loss of service 5.Inappropriate IT User activity Key IT audit approach chart A – Potential Over Control B – Low Risk / Mature Controls C – Low Risk / Limited Controls D – Higher Risk / Mature Controls E – Higher Risk / Limited Controls What gets audited and why? Very significant threat Significant threat Moderate threat Low threat No threat 1 2 3 4 5 21–25 16–20 11–15 6–10 1–5 12345 Over controlledFully controlled Partially controlled Ad hocNo controls Inherent risk / Control maturity

23 #Risk (risk owner) Current Control Environment Governance Strategy Action Owner Completion DateStatus Higher Risk / Limited Controls 1Current IT infrastructure is not scalable to support anticipated service requirements Ad Hoc Controls KPIs between IT and key user groups are in place IT occasional performs capacity and service monitoring IT Management IT Management to perform a full scale assessment with key user groups as to future IT needs IT Management to review current capacity and infrastructure upgrade plans to align to user needs IT Management to continuously monitor the provision of key services and agreed service levels Open How – can IT benefit?

24 Summary Understand who the auditors are, what they are looking for, and what the output of the audit is going to be Understand the risks to your own areas, be proactive in engaging with the auditors to explain your area and align their understanding of key risks with yours Early planning is always performed at a high level, sometimes the principle actions sit with IT or the business. You need to be involved as closely as possible in audit planning to

25 Contact Fraser Nicol, Senior Manager Tel: 020 7951 0748 Mob: 07776047344 fnicol@uk.ey.com

26 PricewaterhouseCoopers LLP PwC Tools and Techniques Martin Allen FIIA, QiCA, CISA 16 January 2008

27 PricewaterhouseCoopers LLP January 2008 Raw goods and services Income Laws and regulations Competitor Intelligence Social responsibilities Tools and Techniques The Environment Finished goods and services Expenditure Financial Accountants Corporate Reporting Non-financial/regulatory reporting Financial Records Management Accounts MIS/ Datawarehouse Corporate Entity Computer System

28 PricewaterhouseCoopers LLP January 2008 Tools and Techniques Indicators that computer tools and techniques would help audit process: Requirement to analyse large volumes of data or complex calculations Reliance upon reports generated from computer systems ‘Black box’ style systems where complex processing of data is not transparent Key reconciliation reports regularly highlight differences New or modified systems Interfaces between computer systems poorly controlled

29 PricewaterhouseCoopers LLP January 2008 Tools and Techniques Tools available on the desktop: Spreadsheets Databases MS Query

30 PricewaterhouseCoopers LLP January 2008 Tools and Techniques Tools that can be acquired: IDEA ACL OAK Datanomic

31 PricewaterhouseCoopers LLP January 2008 Tools and Techniques Risks: Can allow the auditor to reach the wrong conclusion Easy for inexperienced auditors to be caught out Data interrogation does not test controls Benefits: Allows 100% sample size Allows quick identification of unusual or required data Allows auditor to use the power of the computer to improve the efficiency and effectiveness of the audit

32 PricewaterhouseCoopers LLP This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2008 PricewaterhouseCoopers LLP. All rights reserved. 'PricewaterhouseCoopers' refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. PwC

33 ©2008 IT Governance Institute. All rights reserved. 33 How Auditors use C OBI T ® and the IT Assurance Guide Lynn Lawton, International President ISACA, Inc, and The IT Governance Institute, Inc.

34 ©2008 IT Governance Institute. All rights reserved. 34 ISACA and The IT Governance Institute Over 70,000 members in 140 countries Develop and maintain tools for IT and business management, e.g. C OBI T and ValIT Develop and administer certifications, e.g. CISA, CISM, and, coming soon, CGEIT Deliver conferences and educational events around the world Deliver research and thought leadership on topical issues www.isaca.org and www.itgi.orgwww.isaca.orgwww.itgi.org

35 ©2008 IT Governance Institute. All rights reserved. 35 BUSINESS OBJECTIVES AND GOVERNANCE OBJECTIVES Efficiency Applications Information Infrastructure People DELIVER AND SUPPORT MONITOR AND EVALUATE ACQUIRE AND IMPLEMENT INFORMATION IT RESOURCES C O B I T F R A M E W O R K Effectiveness Confidentiality Integrity Availability Compliance DS1 Define and manage service levels. DS2 Manage third-party services. DS3 Manage performance and capacity. DS4 Ensure continuous service. DS5 Ensure systems security. DS6 Identify and allocate costs. DS7 Educate and train users. DS8 Manage service desk and incidents. DS9 Manage the configuration. DS10 Manage problems. DS11 Manage data. DS12 Manage the physical environment. DS13 Manage operations. ME1 Monitor and evaluate IT performance. ME2 Monitor and evaluate internal control. ME3 Ensure compliance with external requirements. ME4 Provide IT governance. PO1 Define a strategic IT plan. PO2 Define the information architecture. PO3 Determine technological direction. PO4 Define the IT processes, organisation and relationships. PO5 Manage the IT investment. PO6 Communicate management aims and direction. PO7 Manage IT human resources. PO8 Manage quality. PO9 Assess and manage IT risks. PO10 Manage projects. AI1 Identify automated solutions. AI2 Acquire and maintain application software. AI3 Acquire and maintain technology infrastructure. AI4 Enable operation and use. AI5 Procure IT resources. AI6 Manage changes. AI7 Install and accredit solutions and changes. PLAN AND ORGANISE Reliability C OBI T Framework

36 ©2008 IT Governance Institute. All rights reserved. 36

37 ©2008 IT Governance Institute. All rights reserved. 37

38 ©2008 IT Governance Institute. All rights reserved. 38 Measuring progress 5 Optimised 4 Managed and Measurable Start point Interim target status Where you want to be

39 ©2008 IT Governance Institute. All rights reserved. 39 Measuring progress IT Process/Maturity Levels for Process XX 2007 Q1 3 Defined Process 2 Repeatable but Intuitive 1 Initial/Ad Hoc 5 Optimised 4 Managed and Measurable Start point Interim target status Where you want to be 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2

40 ©2008 IT Governance Institute. All rights reserved. 40 ISACA and The IT Governance Institute For more information, visit: www.isaca.org www.itgi.org

41 How to plan to get value from your audits 16 January 2008 AUDIT

42 42 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Disclaimer The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

43 43 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Agenda Recap – What is audit? Pre-audit activities During the audit What happens next?

44 44 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Recap – What is audit? Internal auditing  Internal, yet independent assurance over internal controls  Designed to add value and improve an organisations operations External auditing  External, independent opinion over financial statements Audit should be viewed as a critical friend rather than a hindrance It can add value to your organisation – so treat it this way An audit is not something that is done to you; It is something that is done with you

45 45 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Pre-audit activities What to do before the audit takes place Understand who the auditors are, their scope, objectives and deliverables  Get involved in audit planning – understand the risks and issues in your own areas  You can influence – are there any areas you want covered? Plan – The more you prepare, the less painful the review will be Have a central point of contact Confirm logistical arrangements

46 46 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. During the audit Maintain contact with your auditors The central point of contact will be key in ensuring a smooth audit Arrange regular catch-up meetings Understand what the key findings are  Have the auditors got a clear handle on the risks?  Are the key findings valid? Is the audit on track? What are the next steps?

47 47 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. What happens next? How to reap the benefits for your organisation Ensure that you get to review findings  Draft report stage Be positive about the findings – Don’t take the outcome as personal criticism Prepare a plan to address any issues identified and publish it – make sure the plan is implemented! Roll-out learning points across your organisation, wherever possible Prepare for your next audit!

48 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Presenter’s contact details Steven Babb KPMG LLP (UK) +44 (0)7717 511 554 steven.babb@kpmg.co.uk www.kpmg.co.uk


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