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In this Aug 2003 issue of On
Target :
Strategic Audits: The Wider
Issues for Management Accountants
Due to its wide scope, strategic audit issues are pertinent
to management accountants, business analysts, audit directors,
senior managers and executive-level management, as well as those
aspiring to become someone who oversees audit, security,
compliance and control functions. Similarly, Strategic Audits
could not only dwell on highly technical matters, but also
provide management and other stakeholders a perspective on
information systems and technology issues at the strategic
level. This will in turn promote good corporate governance by
enabling managers to make well-informed planning and resource
decisions that will ultimately enhance the value of the
organisation.
Typically the following individuals will be most interested
in the area of Strategic Auditing :
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Management accountants and business analysts
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Audit, control and security managers keeping up with current
issues
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Information technology audit directors
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Risk managers
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Senior and executive managers who oversee audit, security,
compliance and control functions
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Operational, managerial and financial audit professionals
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Experienced information technology audit, control and security
professionals desiring a view of issues facing information
technology audit and security managers
Some of the issues raised in this area are as follows :
Continuous Auditing, Reporting and
Assurance :
Increasing electronic transactions, deconstruction of
business models, the paperless environment, and consequent risk
have brought new attention to the concept of continuous audit
with association research committees, academics and
professionals. The morphing of technology and the contingencies
and the platforms and models for continuous assurance are key
aspects that require consideration in this area. The others are:
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Continuous monitoring and control applications and alternate
structures for the adoption of continuous reporting and
assurance.
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Continuous Corporate Governance Scorecards including Corporate
Radar Systems, Benchmarking, Time Series Analysis and Financial
Statement Analysis
Recruiting, Training, Retaining and Retiring Audit
Staff :
No one can argue that the last two years has not seen
significant changes in the IT audit profession. With three
significant contributing events—the downturn in the economy,
the Enron- WorldCom- Andersen scandal—many of our assumptions
about the profession have been proven to be wrong. Organisations
need to consider what short- and long-term changes may be
required in the future in terms of recruiting, training and
retaining staff.
Further issues in this area include
:
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Long-term changes in the internal audit profession
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Developing new strategies to cope with all the changes in
personal career planning, sources for hiring, retention
strategies and training methodologies
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Changes in focus of many internal audit plans and charters to
meet the new demands of the Sarbanes-Oxley Act and other new
legislation
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How to better evaluate the personal goals and needs of potential
new employees and to measure those against the demands on your
audit department
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The tenets of behavioural interviewing to more accurately
predict success in a changing internal audit environment
Risk Management Report Drivers :
Today’s technology reviews require the IT auditor to
understand business processes, review and assimilate volumes of
data about what resources are accessible, and articulate the
reporting drivers that influenced the rating of the review.
Understanding how to review and assess risk and determining
which aspects of the organizations processes should be evaluated
has necessitated a new approach and understanding of risk
management and report drivers that guide management to the audit’s
conclusion. Report drivers include: control elements, technology
impact, exposure population and sample relationships. Related
issues include :
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Management’s concept of business processes and
communication issues
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Identifying business risk and performing risk assessments
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Determining audit coverage and linking to regulatory compliance
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Identifying controls/management points within the IT
environment.
Developing Integrated Audit Approach
:
Consideration is given to aligning operational, financial and
technical audit objectives for corporate success. Organizations
often encounter many challenges when attempting to adopt such a
strategy and need to identify and evaluate the key objectives of
the operational, financial and technical audit constituents
within, and some of the barriers that inhibit its stakeholders
from working together effectively. A framework to consider
business controls and the impact of the audit approach to the
broader corporate agenda needs to be developed. Related issues
include:
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Key concepts of a successful integrated audit approach and
actively share real-life experiences, challenges and ideas
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Leading practices to better align operational, financial and IT
audit within the internal control arena.
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The importance of bringing internal controls to life
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The value and benefit of adopting an integrated audit approach
to the audit committee and senior executives
Developing Effective Audit Charter and
Practices :
An effective internal audit program begins with the audit
charter and key operating practices. It is essential that a
properly developed charter, supported and approved by senior
management, be implemented. The internal audit charter provides
the basic framework for the management to understand the
activities of the department. In conjunction with the charter,
basic internal audit practices help guide the department in
day-to-day tasks as well as establish the expectations of
operating management. The components of an effective audit
charter and the key components necessary for development need to
be explored. These include :
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What constitutes an effective audit charter
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Developing support and approval for your audit charter
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Identifying key internal audit practices that support the
organization’s control environment
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Keeping audit practices current and aligned.
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In the next issue of ON TARGET, more issues relating to
Strategic Audits will be discussed and concluded.
Notice of Annual General Meeting
The Annual General Meeting of the Institute of Certified
Management Accountants will be held on Tuesday 16th September
2003 at 6pm for 6:30pm, at the new Institute Offices at: CMA
House, Monash Corporate Center, Unit 5, 20 Duerdin Street,
Clayton North, Victoria 3168, Australia.
The meeting will be preceded by a short talk given by Leon
Duval, the President of ICMA on the topic: “The Impact of
Corporate Governance Changes on the Accounting Profession” .
Please inform the Secretariat [Fax: 61-3-95447299] of your
attendance for catering purposes by Monday 8th September 2003.
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