presentation to the partners of ig mpw by bhaskar bhindie
TRANSCRIPT
IndII Activity P243-02: Governance Reform in Internal Audit Function (IG-MPW)
PRESENTATION TO THE PARTNERS OF IG MPW
Why AusAID?
GoA is a leader and a strong proponent of
Good Governance
and
Accountability
in the belief that countries that receive GoA aid and have the two attributes, improve the effectiveness of aid and reduce corruption. These goals are in line with the Paris Declaration.
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The Paris Declaration
In March 2005, representatives of developed and developing countries (including Australia) meeting at the High Level Forum on Aid Effectiveness in Paris “resolve[d] to take far-reaching and monitorable actions to reform the ways we deliver and manage aid”. The result was the Paris Declaration on Aid Effectiveness Selected Summary of Indicators of Progress 1. Partners have operational development strategies 2. Partners have reliable public financial management and
procurement systems 3. Capacity will be strengthened by coordinated support THIS PROGRAM FALLS WITHIN THE GUIDELINES & PRIORITIES
OF GOA
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Why AusAID Supports the IG
The IG understands that changes must be made to improve
the operations in order to meet GoI obligations as IG and to make the unit into Professional Auditors
was the primary mover in proposing the Reform Agenda – he is the Change Agent
is Chairman of the 565+ IGs in GoI & wants to continue a leadership role to set an example
Believes this experience can be a template to replicate at other IG Operations
understands the challenges going forward and has shown ownership
wants to work with AusAID 6
Our Partners
Our Partners
• BPKP
• LKPP
• KPK
• MENPAN (Bureaucratic Reform)
• World Bank
In house partners
• IG MPW Change Management Unit
• MPW Management
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Background
• Early 2009, IG proposed a Reform Agenda (RA) for better value-added services to MPW on budget impact, infrastructure development and activity safeguards.
• Indicative trigger for World Bank’s IDPL 4: Adoption of an Action Plan to strengthen staff capacity and introduce modern RBIA methodology & practices to provide assurance on internal control systems and compliance.
• Initial discussions identified the need for continuing support over stages, grouped by achievements / identified deliverables.
• IndII support commenced in June 2009; • Earlier IndII support helped IG to improve and strengthen its
capacity / technical ability to do internal audit work at MPW. • However, although substantial groundwork for fundamental
auditing using RBIA techniques has been established, there are fundamental “roadblocks” within the IG structure and operations that must be resolved if the gains made to date are to be maintained and further improved.
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Background
Therefore, it was timely to consider other critical areas of improvement, to ensure sustainability of progress
In order to have sustainability:
Processes must have the ability to be repeated
In order to repeat processes
there must be a supporting infrastructure with systems that are imbedded and institutionalized.
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Pillar 3 Enhanced
Anticorruption Environment
Pillar 1 Institutional
Strengthening
Pillar 2 Better
Procurement Practices
Change Management, Training, Education & Quality Assurance
Moving from IACM Level 2 to Level 3
Overview : Current Activity: IndII Activity P243-02: Governance Reform in Internal Audit Function (IG-MPW)
Internal Control System PP 60
IG MPW as The Change Agent (with AusAID / IndII support)
Partners: MPW Management, BPKP
Partners: MPW management, all DGs, BPKP, LKPP & KPK
Partners: MPW Management, all
DGs, KPK
An entirely new program, both in scope and approach
• Although it builds on the prior Activities of IndII support to the IG, we concluded there was a serious danger that gains made may not be sustained longer-term and be capable of being used as building blocks for further improvements unless fundamental roadblocks such as updated relevant management structures and support mechanisms were addressed; therefore the importance of IACM (Pillar 1).
• In addition, GoI is now more focused on eliminating (or at least reducing) corruption; thus Pillar 2, a concentration on improving procurement practices, doing better and more procurement auditing and
• Pillar 3 - creating / monitoring a corruption-free environment.
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Internal Audit Capability Model (IA-CM) for the Public Sector
Overview Presentation Libby MacRae Bob McDonald
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Agenda
The IA-CM
– Its structure and underlying concepts
– Principles in its application
– Using the IA-CM
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What is the IA-CM?
• A universal model with comparability – principles, processes and practices
• To be used globally to improve internal auditing
• Framework for assessing capabilities against standards and practices
• Communication vehicle for defining and advocating the importance of internal auditing
• Roadmap and toolkit for orderly improvement
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Underlying Principles
IA Activity’s Obligations
• Be an integral component of effective governance in the public sector
• Assist organizations achieve their objectives and account for their results
Organization’s Obligations
• Determine optimum level of IA capability to support required governance structures
• Achieve and maintain the desired capability
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Underlying Principles
Selecting Optimum Capability
• Three variables
– Environment
– Organization
– IA Activity
• Different capability required
• Auditing must be cost-effective
• No “one size fits all”
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IA-CM Levels
LEVEL 5
Optimizing
LEVEL 4
Managed
LEVEL 3
Integrated
LEVEL 2
Infrastructure
LEVEL 1
Initial
No sustainable, repeatable
capabilities – dependent upon
individual efforts
Sustainable and repeatable IA practices and procedures
IA management and professional practices uniformly applied
IA learning from inside and outside the organization for continuous improvement
IA integrates information from across the organization to improve governance and risk management
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Level 1- Initial
• Ad hoc or unstructured
• Isolated single audits, document reviews, transaction verification
• Outputs dependent on incumbent skills
• No professional practices or standards applied
• Funding approved by management as needed
• Absence of Infrastructure
• Auditors likely belong to a larger organizational unit
• Institutional capability not developed
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Level 2- Infrastructure
• Repeatable processes or capability established
• Reporting relationships, management, administrative infrastructure, professional practices established
• Audit planning based principally on management priorities
• Continued reliance essentially on skills and competencies of incumbents
• Partial conformance with IIA Standards
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Level 3 - Integrated
• Defined IA policies, procedures, documented and integrated into organization structure
• IA management and professional practices well established, uniformly applied
• IA beginning to align with business and its risks • IA providing advice on performance and
management of risks • Focus on team building and IA capacity and
independence and objectivity • Generally conforms to IIA Standards
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IA-CM 1-page Matrix Services and Role
of IA
People Management Professional
Practices
Performance
Management and
Accountability
Organizational
Relationships
and Culture
Governance
Structures
Level 5 –
Optimizing
IA Recognized as
Key Agent of
Change
Leadership
Involvement with
Professional Bodies
Workforce Projection
Continuous
Improvement in
Professional
Practices
Strategic IA
Planning
Public Reporting of
IA Effectiveness
Effective and
Ongoing
Relationships
Independence,
Power, and
Authority of the IA
Activity
Level 4 –
Managed
Overall Assurance
on Governance,
Risk Management,
and Control
IA Contributes to
Management
Development
IA Activity Supports
Professional Bodies
Workforce Planning
Audit Strategy
Leverages
Organization’s
Management of
Risk
Integration of
Qualitative and
Quantitative
Performance
Measures
CAE Advises and
Influences Top-
level
Management
Independent
Oversight of the
IA Activity
CAE Reports to
Top-level
Authority
Level 3 –
Integrated
Advisory Services
Performance/
Value-for-Money
Audits
Team Building and
Competency
Professionally
Qualified Staff
Workforce
Coordination
Quality
Management
Framework
Risk-based Audit
Plans
Performance
Measures
Cost Information
IA Management
Reports
Coordination with
Other Review
Groups
Integral
Component of
Management
Team
Management
Oversight of the
IA Activity
Funding
Mechanisms
Level 2 –
Infrastructure
Compliance
Auditing
Individual
Professional
Development
Skilled People
Identified and
Recruited
Professional
Practices and
Processes
Framework
Audit Plan Based
on Management/
Stakeholder
Priorities
IA Operating
Budget
IA Business Plan
Managing within
the IA Activity
Full Access to the
Organization’s
Information,
Assets, and
People
Reporting
Relationships
Established
Level 1 –
Initial
Ad hoc and unstructured; isolated single audits or reviews of documents and transactions for accuracy and compliance; outputs
dependent upon the skills of specific individuals holding the position; no specific professional practices established other than those
provided by professional associations; funding approved by management, as needed; absence of infrastructure; auditors likely part of a
larger organizational unit; no established capabilities; therefore, no specific key process areas
© 2009, The IIA Research Foundation – All Rights Reserved
Key Process Area (KPA)
Purpose
Essential
Activities
Outputs
Outcomes
Institutionalizing Practice
Examples
Key Process Area
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People Management Level 2 – Infrastructure
Skilled People Identified and Recruited
Purpose – To identify and attract people with the necessary competencies and relevant skills to carry out the work of the IA activity. Appropriately qualified and recruited internal auditors are more likely to provide credibility to the internal audit results.
Essential Activities • Identify and define the specific audit tasks to be conducted • Identify the knowledge, skills (technical and behavioral), and other
competencies required to conduct audit tasks • Develop job descriptions for positions • Determine proper pay classification for positions • Conduct valid, credible recruitment process to select appropriate candidates
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People Management Level 2 – Infrastructure
Skilled People Identified and Recruited
Outputs • Internal audit positions are filled with appropriately qualified persons
Outcomes • Audit work is conducted with due professional care • There are credible audit observations, conclusions, and recommendations
Institutionalizing Practice Examples • Visible commitment and support through senior management action to ensure that a
competent and qualified CAE is in place, and the necessary resources are provided to appropriately staff the IA activity
• Staffing and recruitment policy • Job descriptions • Classification system, including levels specific to internal auditing
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Institutionalizing a Key Process Area
Commitment To Perform Activities
Ability to Perform
Activities
Activities Verified
Activities Performed
Activities Measured
Key Process Area
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Using the IA-CM as an Assessment Tool
• Understand the purpose and structure of the IA-CM • Identify the KPAs that appear to be institutionalized by
the IA activity • Obtain and review documentation re: IA activity,
organization, and environment • Interview managers/stakeholders • Confirm the actual KPAs institutionalized • Determine the capability level • Communicate and confirm the opportunities for
improvement • Develop and implement the improvement plan
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Principles in its Application
• Apply professional judgment
• Environmental and organizational factors
• A practice cannot be improved if it cannot be repeated
• Capability gets built in steps/stages
• KPAs at one level set the foundation for KPAs at the next level
• A KPA is achieved when it is institutionalized into the culture of the IA activity
• All KPAs, up to and including the KPAs at a given level, must be institutionalized to achieve that level
• Not all all elements need be at the same level
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Important Considerations
• All levels in the IG participate
• Organizational management and stakeholder support
• Processes are institutionalized and sustainable
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Procurement Standards in Indonesia
IndII Activity P243-02: Governance Reform in Internal Audit Function (IG-MPW)
9/6/2012 IndII Activity P243-02: Governance Reform
in Internal Audit Function (IG-MPW)
Presented by Rob Thompson
Identify the Need
Develop the Specification
Define the Contractual Terms
Research the Market
Identify Pre-Qualification and Select Bidders
Invite Quotes/ Tenders
Analyse Quotes/ Tenders
Clarify/ PTN VFM
Contract Award
Review of Performance
Payment
Approval to Proceed
Monitor Performance
Develop Contract Strategy
Manage Relationship
Set Evaluation Criteria
The Procurement Process
Key Areas of Procurement Activity
• Good Sourcing Principles and Practices
• Price and Cost Analysis
• Inventory Management
• Legal Protection
Procurement Competencies being prepared
Approach • Analysis of current competencies, procedures, practices and policies
• Work with MPW management and selected DG’s to enhance procurement competency
• Develop and support the ULP in developing good procurement practice
• Applying Risk Assessment & Management techniques to all procurement
• Introduction of best practice procurement training
• Presenting and mentoring the introduction of new procurement tools and techniques
• Providing practical guidance to MPW & DG’s to ensure a consistent application of best practice techniques
Key Messages • Early involvement (by both parties) in the
procurements to resolve potential risk areas in time
• Shared understanding of what is procurement • Integrate lessons learnt from past experience in
future training and procurement practices • Best practice contract management • Cost not price • Performance not conformance • Consistency in actions.
Best Practice Procurement WILL
achieve compliance,
Compliance alone does not ensure a best value for money
procurement.
9/6/2012 IndII Activity P243-02: Governance Reform
in Internal Audit Function (IG-MPW)
Change Management Support Program (CMSP)
Dr Steve Harris
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Role in Change Management
• Private and Public Sectors – Reform efforts gone under many banners
• TQM, PRR, Reengineering, restructuring, cultural change, turnaround
• Core focus: “making fundamental changes in doing business” – Results variable
• Some reforms successful & few utter failures & most fall somewhere in between
• Lessons learned are significant
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CMSP at core of reform
• CMSP + CM Strategy (D5)
– Inform & guide key strategic/operational decisions the MoW/IndII Team make
– Address and overcome Roadblocks
– Linked closely to long-term approach outlined in the 'roadmap’
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Lessons Learned • The most general lesson is change is a series
of steps/stages over considerable time (5-10 years)
– Tenacity to skip stages and creates an illusion of speed and never produces satisfying results
• Critical mistakes during stages have a devastating impact on the reform program
– Declaring early victory
• Negative impact, momentum lost
• Erodes/negates progress made
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Lessons Learned (con’t)
• Transformation thus is a process not an event
– Series of building blocks
– 5-10 year time frame
– Resist skipping stages
• Standard approach to CM
– Targeted areas are: • Org's Strategy
• People, pay, processes
• Move staff
• Realign functions
• Rewards and incentives
• Remove inefficiencies
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Lessons Learned (con’t)
Sustainable and effective leadership is often the missing Ingredient in reform implementation
Leadership • MPW leaders as 'Guiding Coalition’ • IndII Team as 'Change Agents' • Selected employees as CAs • Establish CM mechanism Effective persuasion campaign • Early activation/weeks or months • IndII Team instrumental here/design and implement • goals: ensure employees listen to tough messages • Understand institutional and national psychology Campaign goals: ensure employees listen to tough messages; question old
assumptions; embrace new ways IndII Team mentor and nurture/training (technical&CM)
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Key IG MPW - IndII Team Phased Steps (Source: JP Kotter)
• Sense of urgency/identify crises & opportunties
• Forming a powerful coalition to lead change
• Create Vision to direct reform
• Communicate Vision/use every vehicle available
• Empowering others to act on vision (get rid of obstacles (encourage risk taking/change systems or structures that undermine the vision
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Key IG MPW - IndII Team Phased Steps (Source: JP Kotter)
• Planning for and creating short term wins (plan and create performance improvements)
• Consolidate improvements and produce even more change (hire promote and develop employees who can implement vision)
• Institutionalise (highlight link between new behaviours and Departmental success/ensure succession
• M&E/Impact Focus
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Case Study: MAIL/Afghanistan • Institutional mandate for reform mandatory (link to strategic level
leadership in national public sector reform program)
• Capacity development
– Based on long term commitment
– competency based incentives
– mentoring by national specialists
• Inst'l reforms not too ambitious
– No 'whole inst't approach
– select small operational priorities
– Use them as cascading models to demonstrate CM principles
• Monitor and evaluate management ‘energy’ in the Department
• Vertical/Horizontal communications is critical
• Establish mechanism for wide ranging stakeholder collaboration and coordination
• Guaranteed funding critical 45