Chapter12PPT4thedition.pptxInternal 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.
Introduction to the Engagement Process
Chapter 12
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 12: Introduction to the Engagement Process
Learning objectives
Understand the types of engagements internal auditors perform.
Understand the key activities involved in planning and performing an assurance engagement and reporting the engagement outcomes.
Describe how the consulting engagement process differs from the assurance engagement process.
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.
Standards Related to the Engagement Process
Chapter 12: Introduction to the Engagement Process
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 12: Introduction to the Engagement Process
Assurance & Consulting Engagements
Assurance Services – An objective examination of evidence for the purpose of providing an independent assessment on governance, risk management, and control processes for the organization.
Consulting Services – Advisory and related [customer] service activities, the nature and scope of which are agreed with the [customer], are intended to add value and improve an organization’s governance, risk management, and control processes without the internal auditor 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 12: Introduction to the Engagement Process
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.
Add exhibit 1-2
6
Plan Activities
Determine engagement objectives and scope
Understand the auditee, including auditee objectives and assertions
Identify and assess risks
Identify key controls
Evaluate adequacy of control design
Create a test plan
Develop a work program
Allocate resources to the engagement
Chapter 12: Introduction to the Engagement Process
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.
Perform Activities
Conduct tests to gather evidence
Evaluate evidence gathered and reach conclusions
Develop observations and formulate recommendations
Chapter 12: Introduction to the Engagement Process
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.
Communicate Activities
Perform observation evaluation and escalation process
Conduct interim and preliminary engagement communications
Develop final engagement communications
Distribute formal and informal final communications
Perform monitoring and follow-up procedures
Chapter 12: Introduction to the Engagement Process
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.
Observation Levels & Distribution Approaches
Not an observation
Observation
Reportable observation
Significant Observation
Chapter 12: Introduction to the Engagement Process
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.
Add exhibit 1-2
10
Summary
There are two types of engagements
Assurance engagements
Consulting engagements
There are three phases in assurance engagements
Plan
Perform
Communicate
There are four levels of observations
Not an observation
Observation
Reportable observation
Significant observation
Chapter 12: Introduction to the Engagement Process
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.
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.
