Internal Auditing in Government: A Global Perspective

David A. Richards, CIARichard F. Chambers CIA, CGAP, CCSAThe Institute of Internal Auditors

Agenda

Current trends in corporate internal audit

The unique nature of audit in governmentEnsuring accountability

Improving integrity

Fighting corruption

Challenges facing government auditors

Emerging Trends in Corporate Internal Audit

Visibility of and emphasis on internal audit reaching new heightsFostering compliance with new regulations and statutesRenewed focus on:

RiskControlGovernance

Increased emphasis on objectivity and independence

New ChallengesFacing Internal Auditors

Maintaining a fully staffed internal audit activity with appropriate skill sets

Reporting relationships with senior management and the board

Increased demand for control and financial focused engagements

Fostering compliance with statutory and regulatory requirements

Maintaining a risk-focused audit plan in an era of competing priorities

Providing consulting services and maintaining objectivity in fact and appearance

The Unique Nature of Government Auditing

Alignment – reporting relationships often defined by statute

Charters – more clearly defined roles and responsibilities

Access to information – typically unrestricted

Operating environment – often political

Visibility of final reports – often made public

Key responsibilities: assuring accountability; improving integrity; fighting corruption

Government Auditors:Assuring Accountability

Government operations are funded by and provided for the benefit of the citizensCitizens have the right to expect their governments to run:

EfficientlyEffectivelyFree of waste, fraud, and mismanagement

Ensuring accountability is a vital responsibility of government auditors

Government Auditors:Improving Integrity

The vast majority of government officials carry out their responsibilities with the utmost integrity

Some government officials fall short

Audit can mitigate the risk of integrity failures by:Proactively assessing and addressing high-risk areas

Promptly reporting instances of fraud to appropriate authorities for investigation

Developing and delivering appropriate training and awareness briefings within their agencies

Government Auditors:Fighting Corruption

Corruption can exist within government or on the part of contractors and others who conduct business with governmentA strong and effective audit function is a critical tool in fighting corruptionSuccess factors include an audit function that is:

Adequately resourcedIndependentTrained in fraud prevention and detectionNetworked or integrated with appropriate investigative and law enforcement agencies

Top Ten Challenges Facing All Government Audit Organizations

1. Adequate audit staffing 82%2. Adequate compensation 81%3. Ability to measure performance 73%4. Adequate technology resources 71%5. Ability to report results promptly 70%6. Ability to benchmark 68%7. Promoting effective governance 67%8. Ability to plan based on risk 65%9. Ability to contract for experts 62%10. Adequate resources for CPE’s 61%

Source: Global Audit Information Network Flash Survey

Questions?

David A. Richards and Richard F. Chambers

The Institute of Internal Auditors