Internal Auditing: Assurance & Advisory Services
4th edition
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
The Consulting Engagement
Chapter 15
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Learning objectives
Articulate the difference between assurance and consulting engagements.
Understand that engagements may be blended to include both assurance and consulting components.
Discuss the various types of consulting services provided by internal auditors.
Understand how internal audit functions select which requested consulting engagements to perform.
Understand the process for conducting an advisory consulting engagement.
Describe the benefits to an organization when the internal audit function provides consulting services.
Show how the internal audit function can provide insight to stakeholders through the performance of consulting engagements.
Understand the importance of determining customer expectations for consulting activities.
Discuss the Standards as they pertain to consulting engagements.
Understand the need for the internal audit function to set boundaries for consulting activities.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Standards relevant to
consulting engagements
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Definition
The IIA defines the consulting engagement as:
“Advisory and related client services activities, the nature and scope of which are agreed upon with the client and which are intended to add value and improve an organisation’s governance, risk management and control processes while not assuming management responsibility.”
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
2010.C1
The chief audit executive should consider accepting proposed consulting engagements based on the engagement's potential to improve management of risks, add value, and improve the organization's operations. Accepted engagements must be included in the plan.
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2010 planning
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
2120.C1
During consulting engagements, internal auditors must address risk consistent with the engagement’s objectives and be alert to the existence of other significant risks.
2120.C2
Internal auditors must incorporate knowledge of risks gained from consulting engagements into their evaluation of the organization’s risk management processes.
2120.C3
When assisting management in establishing or improving risk management processes internal auditors must refrain from assuming any management responsibility by actually managing risks.
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2120 risk management
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
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2130.C1
Internal auditors must incorporate knowledge of controls gained from consulting engagements into evaluation of the organization’s control processes.
2130 control
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
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2201 – Planning Considerations
2201.C1 Internal auditors must establish an understanding with consulting engagement clients about objectives, scope, respective responsibilities, and other client expectations. For significant engagements, this understanding must be documented.
2210 – Engagement Objectives
2210.C1 Consulting engagement objectives must address governance, risk management, and control processes to the extent agreed upon with the client.
Additional standards
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
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The nature of consulting services may include:
Formal consulting engagements – Formal consulting engagements are planned engagements subject to written agreement with management.
Informal consulting engagements – Informal consulting engagements consist of routine activities, such as participation on standing committees and limited-life projects.
Special consulting engagements – Examples of special consulting engagements include, among other things, participation on a merger and acquisition team or a system conversion team.
Emergency consulting engagements – Emergency consulting engagements may include, among other things, participation on a disaster recovery team or temporary help to meet special requests or unusual deadlines.
Blended Engagements – A blended engagement includes both an assurance component and a consulting component.
The nature of
consulting services
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
The internal audit function provide value through:
Participation in due diligence projects
Providing training on risk management techniques
Involvement on projects involving high risk areas such as information security
Providing assistance during actual disasters and disaster scenario testing
Performing fraud investigations and post mortem analysis
Assisting with development of policies and procedures
Participation on committees with control focus
Advising on control standards
Liaising with external auditors, government agencies, vendors, and contractors on control issues
Fast, proven consulting results
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Define the nature of consulting engagements in the charter
Limit the nature, type, and/or level of involvement, as necessary
Employ a CAE-driven screening process when selecting consulting engagements to pursue
Monitor the relationship between assurance and consulting engagements within the same area
Rotate internal auditors performing engagements
Clearly disclose the nature of the engagement in reports
Chapter 15: The Consulting Engagement
Maintaining objectivity in
consulting engagements
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
Level of risk involved
It is included in the annual audit plan
Management has requested it
There are new or changing conditions
Impact to the organization
Considerations for selecting engagements
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
Information Gathering
Brainstorming
Engagement Definition
Definition of Scope with Management
Engagement Letter
Project Execution
Communication of Results-Oral and Written
Documentation and Follow-up
Consulting engagement tasks
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
The Engagement Letter
Workpapers – How much is enough?
Audit Report
Audit Memorandum
Requested documentation by management
Communication to the Audit Committee
Consulting engagement documentation
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Independence
Objectivity
Relationships
Focus on business strategy
Moving the profession forward
Thinking outside of the box
Change will happen. You just need to adapt and plan for the future.
Discussion points to consider
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Healthcare
Media
Energy
Global Manufacturing
Retail
Universities
Change happens with or without internal audit.
Fast changing industries
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
| Consulting | Assurance | ||
| Relationships/Interpersonal Skills | HIGH | MEDIUM | |
| Business Experience | HIGH | MEDIUM | |
| Quickly Learn and Adapt to Issues | HIGH | MEDIUM | |
| Risk Orientation | MEDIUM | HIGH | |
| Facilitation and Advising | HIGH | LOW | |
| Technical (Accounting, Technology, and Regulatory) | MEDIUM | HIGH | |
| Presentation Skills | HIGH | MEDIUM | |
| Communications (Written and Verbal) | HIGH | MEDIUM | |
| Unstructured Problem-solving | HIGH | LOW | |
| Detail Orientation | MEDIUM | HIGH |
Comparing Engagement-specific
skill sets
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
The skill sets required to deliver consulting results with high impact include:
Strong facilitation and collaboration skills
Broad business experience and subject matter expertise
The ability to build relationships quickly
The ability to learn new material quickly
The ability to be very responsive
Creativity
Communicate results quickly
high impact consulting
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
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Chapter 15: The Consulting Engagement
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Chapter 15: The Consulting Engagement
Which attitude enables success?
“I’m the auditor and I’m here to audit you.”
OR
“I’m the consultant and I’m here to assist you in evaluating risks and internal controls.”
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The winning approach
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Best of luck on your Internal Audit Consulting Career!
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.
Internal Auditing: Assurance & Advisory Services, 4th Edition © 2017 by the Internal Audit Foundation.