Singapore Government

IA Essentials #5

The International Standards for the Professional Practice of IA ("Standards") state that the chief audit executive must develop and maintain a quality assurance and improvement programme that covers all aspects of the IA activity.

The quality assurance and improvement programme should evaluate IA activity’s conformance with the Definition of IA and the Standards and whether the internal auditors apply the Code of Ethics. This programme should assess the efficiency and effectiveness of the internal audit activity and also identifies opportunities for improvement.

An important aspect of the quality assurance and improvement programme is that it must consist of internal and external assessments. The assessment should cover the entire scope of audit and consulting work performed by the IA function.

It is not sufficient to merely conduct the assessment, it is also important that any recommendations as a result of the assessment should be followed up on in a timely and appropriate manner. The chief audit executive should be responsible for implementing any improvements.

The results of the external and internal quality programme assessments should be communicated by the chief audit executive to the various stakeholders such as senior management, the board, and external auditors. The chief audit executive should report to senior management and the board, at least on an annual basis, about the quality programme efforts and results.

The Singapore Code of Corporate Governance principle 13.5 also makes reference to this by stating that the Audit Committee should, at least annually, review the adequacy and effectiveness of the IA function, indicating that an assessment should minimally be performed once a year.

Internal Assessments

The International Standards for the Professional Practice of IA ("Standards") state that the internal assessment for the quality assurance and improvement programme must include:

  • Ongoing monitoring of the performance of the IA activity; and
  • Periodic self-assessments or assessments by other persons within the organisation with sufficient knowledge of IA practices.

The internal assessment should be an integral part of the day-to-day supervision, review and measurement of the IA activity. Some processes and tools used in ongoing internal assessments are:

  • Engagement supervision,
  • Checklists and procedures (e.g. in an audit and procedures manual) are being followed,
  • Feedback from audit customers and other stakeholders,
  • Selective peer reviews of workpapers by staff not involved in the respective audits,
  • Project budgets, timekeeping systems, audit plan completion, and cost recoveries, and/or
  • Analyses of other performance metrics (such as cycle time and recommendations accepted).
  • Periodic internal assessments may refer to the IIA’s Quality Assessment Manual as a guideline on developing the internal assessments as well as the models and assessments tools used. It is also vital to note that those who are assigned responsibility for conducting the ongoing and periodic reviews should report and communicate results directly to the chief audit executive.

The Quality Assessment Manual consists of 5 Chapters:

  • Chapter 1 gives the rationale for a new edition of the manual, based primarily on the Standards and the ongoing evolution of internal auditing.
  • Chapter 2 outlines the external quality assessment, which should be the capstone of any activity's quality program.
  • Chapter 3 expands the external quality assessment process to a wider range of internal audit activities.
  • Chapter 4 sets forth the elements of an internal audit activity's internal quality assessment process.
  • Chapter 5 is an overview of the program segments for quality assessment and other tools, with brief guidance for their use in external and internal assessments, as well as in self-assessments

Click here to read more about The Quality Assessment Manual

External Assessments

The International Standards for the Professional Practice of IA ("Standards") state that external assessments must be conducted at least once every five years by a qualified independent assessor or assessment team from outside the organisation.

External assessments can be in the form of a full external assessment, or a self-assessment with independent external validation. For this purpose, a self-assessment with independent external validation refers to a comprehensive internal self-assessment with independent validation by a qualified, independent external reviewer or review team. A periodic internal assessment performed within a short time before an external assessment can facilitate and reduce the cost of the external assessment and can serve as the self-assessment portion of the process of internal self-assessment with independent validation. External assessments should cover the entire spectrum of audit and consulting work performed by the IA activity. The chief audit executive is to ensure that the scope clearly state the expected deliverables of the external assessment in each case.

Individuals who perform the external assessment must be independent of the organisation. They should be free from any obligation to, or interest in the organisation whose IA activity is the subject of the external assessment or the personnel of such organisation. Such an individual should also be a competent and certified IA professional, be well versed in the best practices of the profession, and have at least three years of recent experience in the practice of IA or related consulting at a management level.

As with the internal assessment, the chief audit executive should communicate the results of external quality assessments to the various stakeholders such as senior management, the board, and external auditors.

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