Internal Audit Process

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Internal Audit Process

• Credit Union Internal Auditing
• from the Ground Up
• John Gallagher, Director Internal Audit
• SEFCU (New York)
• Barry Lucas, Internal Auditor
• Desco FCU (Ohio)
• Pat Richey, Director Internal Audit
• Finance Center FCU (Indiana)

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Serving Many Masters

• Internal Audit Definition
• Internal auditing is an independent, objective
  assurance and consulting activity designed to add
  value and improve an organization's operations.
  It helps an organization accomplish its
  objectives by bringing a systematic,
• disciplined approach to evaluate and improve
  the effectiveness of risk management, control,
  and governance processes.

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Serving Many Masters

• Role

• Independence and Objectivity

• Assurance and Consulting

• Add Value and Improve Services

• Systematic and Disciplined

• Reporting Structure

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SEFCU Organizational Chart
Members
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Serving Many Masters

• Responsibilities

• Internal Audit Charter

• Supervisory/Audit Committee Charter

• Job Descriptions

• Audit Staff Structure

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Serving Many Masters

• Relationships and Politics

• Management

• Employees

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Serving Many Masters

• Relationships
• Supervisory Audit Committees
• Board of Directors

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Serving Many Masters

• Relationships
• External Auditors
• Regulators

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Serving Many Masters

• QUESTIONS ?

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Performing Audit Work

• Where Do I Start?

Risk Assessment
Audit Universe
Models
Risk Priority
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Performing Audit Work

• Where Do I Start?
• Business/Audit Plan

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Performing Audit Work

• Where Do I Start?
• Audit Scheduling
• Distractions
• Fraud Investigation
• New Products / Services
• Training / Vacations
• Turn over

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Performing Audit Work

• Objectives
• - broad statements
• - risks

• Scope
• - who
• - what
• - when
• - where

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Performing Audit Work

• Audit Program
• - written procedures
• - interview questions
• - collecting information
• - testing, sampling
• - analyzing
• - evaluation

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Performing Audit Work

• Workpapers
• - support findings
• - restricted access
• - retention
• - testing, sampling
• - analyzing
• - evaluation

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Performing Audit Work

• QUESTIONS ?

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Communications and Follow Up

• Audit Reports
• Management Internal Audit need to agree up
  front
• Findings
• Recommendations
• Report Structure
• Who gets them?

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Communications and Follow-Up

• Follow-Up
• Follow-up Audits
• Monitoring results
• Implementation of recommendations
• If you do not do this Nothing happens!

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Communications and Follow-Up

• Supervisory / Audit Committee Meetings
• Frequency
• Structure
• Agenda

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Communications and Follow-Up

• QUESTIONS ?

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Tools and Resources

• Technology
• Paperless auditing
• Internet tools
• Analytical review using audit software

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Tools and Resources
Basic Internal Controls - COSO

• Credit Union Objectives
• - Operations
• - Financial Reporting
• - Compliance

• Internal Control Components
• - Control Environment
• - Risk Assessment
• - Control Activities
• - Information and Communication
• - Monitoring

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Tools and Resources
Enterprise Risk Mgmt - COSO

• Credit Union Objectives
• - Operations
• - Financial Reporting
• - Compliance
• - Strategic

• ERM Components
• - Internal Environment
• - Objective Setting
• - Event Identification
• - Risk Assessment
• - Risk Response
• - Control Activities
• - Information and Communication
• - Monitoring

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Tools and Resources
International Standards for the Professional
Practice of Internal Auditing - Attribute
Standards - Performance Standards - Quality
Assurance Review
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Tools and Resources

• Control Self-Assessment
• Management Buy In
• Business Objectives
• Identify Risks
• Gather Best Practices
• Provide Documents

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Tools and Resources

• Resources
• Professional Journals
• - IIA, ACFE, ISACA
• Professional Standards
• - COBIT
• - GTAGs
• Current Issues of Internal Auditing Governance
• Websites
• - Credit union industry, regulatory,
  professional

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Audit Professionalism

• Certification
• - CIA Common Body of Knowledge
• - CFE
• - CUCE, NCCO
• - CISA
• - CPA
• - CFSA

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Audit Professionalism

• Training
• - Conferences / Seminars
• - Local Chapters
• - Webinars / Teleseminars
• - Compliance Schools

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Audit Professionalism

• ACUIA
• Website
• Message Forum
• Membership Directory
• Audit Guide
• The Audit Report magazine
• Lending Library
• Conferences, seminars

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Tools and Resources

• QUESTIONS ?