1. External Quality Assessments

2. Session Overview Quality Standards Internal Quality Assessments
External Quality Assessments
Peer Reviews
Common Problems Observed
Online Resources Available

3. Professional Practices Framework
International Standards for the Professional Practice of Internal Auditing (Standards)
Mandatory Guidance
Attribute
Performance
Implementation
Assurance
Consulting
Practice Advisories
Development and Practice Aids

4. Quality Standards 1300 - Quality Assurance and Improvement Program
Quality Program Assessments
Internal Assessments
External Assessments
Reporting on the Quality Program
Use of “Conducted in Accordance with the Standards”
Disclosure of Noncompliance

5. Standard 1311 Internal Quality Assessments
Ongoing
Work Paper Reviews
Performance Evaluations
Actual vs. Budgeted Analysis
Various Monitoring Metrics
Customer Surveys
Periodic
Self-Assessment
Annually – Covering all Standards over 5 years
Quarterly/Semi-Annual – Portions of Standards each year
Assess compliance with IA Activity Charter

6. Standard 1312 External Quality Assessments
Required every 5 years
Standard enacted January 1, 2002
Two methods:
External Quality Assessment with the review and report by an independent team
Self Assessment with report validation by an Independent Validator

7. Objectives of External Reviews
Provide an opinion on the internal audit activity’s conformance to the spirit and intent of the Standards.
Assess the efficiency and effectiveness of the internal audit activity in light of:
Its charter
Expectations of the board, executive management, and the CAE
Identify opportunities and offer ideas and counsel to the CAE and staff for:
Improving their performance
Increasing the value they add to the enterprise

8. Why Conduct an External Quality Assessment?
To provide independent analyses:
Do we meet professional standards?
Can things be done better?
Should more be done?
Is maximum value being received for each dollar of expense?
Can we add more value to management and the audit committee?
Can we enhance our image, perceptions, and credibility within the organization?

9. Standard 1321 Use of "Conforms with the Standards"
Internal auditors are encouraged to report that activities are in conformance with the Standards
However, internal auditors may use the statement only if assessments of the quality assurance and improvement program demonstrates conformance with Standards.

10. External Quality Assessment
Contract with outside provider to perform review, write the report and determine the compliance with the Standards:
Regional accounting firms
Outsource providers
Independent consultants
Independent Peers

11. Self Assessment with Independent Validation
Internal Audit Activity conducts their own Self assessment, determines compliance with the Standards and writes the report
Internal Audit Activity then engages an independent Validator to review documentation and perform limited testing
Validator concurs with report or disagrees and issues own report (opinion)
Validator can be an external service provider or from a peer pool

12. Peer Reviews
Peer reviews between three or more organizations does meet the requirements of an external quality assessment.
Reciprocal peer reviews between two organizations would not pass the independence test.
Contract between three (3) or more companies within the same industry or other affinity group, regional association, or other group of organizations.

13. Competence of Assessors and Validators
Practice Advisory recommends:
Be a competent, certified audit professional.
Be well versed in the best practices of the profession.
Have at least three years of recent experience in the practice of internal auditing at a management level.
Have additional competence gained from working previously as a team member on an external quality assessment.

14. Independence of Assessors and Validators
Practice Advisory recommends:
“be free from any obligation to, or interest in, the organization whose internal audit activity is the subject of the assessment …”

15. A 12-Point Process Select and train a QA team
Have the CAE complete the QA self-study
Make a preliminary visit to the organization
Use customer and staff surveys
Perform the on-site work including:
Review of administrative policies and procedures
Consideration of enterprise risk’
Evaluation of risk assessment in audit planning
Review of working papers and final reports for selected engagements
Review of number and skills of internal audit staff
Evaluate adequacy of IT audit coverage

16. A 12-Point Process
Evaluate the internal audit activity’s effectiveness at remaining current and adding value through interviews with:
Selected members of the board
Executive management
Operating managers
Internal audit staff
Consider other monitoring functions, and evaluate coordination of internal audit work with that of independent auditors.
Evaluate the internal audit activity’s conformance with IIA Standards and other relevant standards.

17. A 12-Point Process
Review quality/process improvement actions currently underway
Provide a summary of issues and recommendations, and hold a closing conference with the CAE and/or other requestors.
Draft a report, obtain comments, and issue a final report
Hold a follow-up executive conference (optional)

18. Common Problems Observed by IIA External Assessment Teams
Inappropriate CAE reporting relationships
Out-of-date charters for internal audit activity
Lack of board approved policy on internal control responsibility
Client perception of inadequate audit staff knowledge
Lack of a formalized risk assessment process
Lack of understanding regarding:
Internal audit activity’s consulting responsibilities
Reflection of consulting in the mission and charter
Inadequate IT coverage or technical skills

19. Quality Assessment Resources at www.theiia.org/quality
Frequently Asked Questions about Quality
Providers of External Quality Assessments
List of Organizations with Completed External Quality Assessments
Becoming a QA Volunteer

20. Quality Assessment Resources at www.theiia.org/quality
Sample request for a quality assessment proposal
Quality Assessment Advanced Preparation
Audit Customer (Client) Survey
Internal Audit Staff Survey
Self-Assessment Guide
Models
Model Audit Committee Charter
Model Internal Audit Activity Charter
Model Management Control Policy
Model Quality Assurance and Improvement Program

21. Questions?

22. IIA Contact 247 Maitland Avenue Altamonte Spring, Florida 32701-4201
USA
Tel Fax