banco interamericano de desarrollo the development of the internal auditing function to combat...

Banco Interamericano de Desarrollo www.iadb.org

The development of the Internal Auditing function

to combat fraud and corruption

Martin Guozden CP, CPA, CIA, CISA, CCSA

Office of the Auditor General


Agenda

• IDB Group Systemic Framework against Corruption

• Successful Internal Auditing Function

• Regional Forums

2


Systemic Framework against Corruption

• Personnel Internal Policies

• Procurement Policies

• Bank’s General policies and guidelines

3


Specific Bank’s Strategies

• Code of Ethics (2006)

• Policies for the Procurement of Goods and Works Financed by the Bank (2006)

• Policies for the Selection and Contracting of Consultants Financed by the Bank (2006)

• Modernization of the State Strategy (2003)

4


Key Developments Affecting Internal Audit Key

• Professional Practices Framework

• Internal Audit Expectations

• Components of a Successful Internal Audit Strategy

5


Professional Practices Framework

• Definition of Internal Auditing • Code of Ethics • Standards for the Professional Practice of

Internal Auditing– Attributes– Performance– Implementation

Guidance– Practice Aids– Evolving Issues

6


System Components Interrelations

7

Control Enviroment

Risk Evaluation

Control Activities

Information and Communication

Monitoring

Un

it A

Un

it B

Ac

tiv

ity

1 Ac

tiv

ity

2Operatio

nal

Financial In

form

ation

Compliance

Operational ObjectivesC

om

po

ne

nts

Per COSO Internal Control - Integrated Framework


Internal Control Process

8

Per COSO Guidance for Smaller Public Companies


Internal Audit Expectations

– Aligning Internal Audit Objectives with Business Objectives

– Demonstrating and Adding More Value

– Internal Audit Becoming a Key Player in the Risk Management Process

– Educating Management

– Increasing Use of Technology

– Increasing Use of Knowledge

– Using “Non-Traditional” Internal Auditors

9


Necessary Investments for a Successful Internal Audit

Human Resources

Technology Knowledge

MethodologyCommunications

10


The Evolution of Internal Audit

Compliance Auditing

Internal Control Process Reviews

Operational Process Reviews

Strategic Business

Partner

Current State

Desired State

11


Strategic Partnering Based Auditing

Internal Audit work should be based on:

• working with management – develop a thorough, shared understanding of the business and various business risks

• determine the Business Risk Management Process (BRMP) that should be in place to effectively manage the key risks

• audit for design, operational effectiveness and compliance within each BRMP component

12


Internal Audit Challenges and Barriers

• People

• Methodology

• Knowledge

• Technology

• Communications

Provide More Value

More Comprehensive

Risk Coverage

Operate More Efficiently

Significant Investments Often Needed

Internal Audit’s Challenges

Future Successful Internal Audit Function

CommonBarriers

13

Aligned with

organization’s

business objectives

Acts as corporate change

agent

Risk model focus is on

enterprise risk

Investments enable

Internal Audit to keep pace

with changing business

environment

Internal auditors are better

prepared for future

leadership roles


Regional Forums-Objectives

14

• “Logical Framework workshop” to develop a plan of action that serves as a foundation for future actions of the Bank in strengthing the control and internal auditing

• “Forum on Internal Auditing” to share knowledge and information regarding the internal audit’s role, along with a presentation of the plan of action; as a result of the logic frame workshop.


Regional Forums - Participants

15

Logical Framework Workshop

• Public Institutions – Technicians• Special Guest• Donor's community • IIA, OLACEF, CAROSAI

Forum on Internal Auditing

• Logical Framework workshop participants• Public Institutions – Authorities


Regional Forums-Expectations

16

• Pilot Porject in Central America

• Finnancing obtained for a new project

• Analysis from obtianed results

• Expand to the rest of the Region


Questions

banco interamericano de desarrollo the development of the internal auditing function to combat...

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