PDF Archive

Easily share your PDF documents with your contacts, on the Web and Social Networks.

Share a file Manage my documents Convert Recover PDF Search Help Contact



Ist Survey Report State of Internal Audit in Pakistan ! .pdf


Original filename: Ist Survey Report - State of Internal Audit in Pakistan !.pdf
Title: Microsoft Word - State of Internal Audit Pakistan.docx

This PDF 1.3 document has been generated by Word / Mac OS X 10.11 Quartz PDFContext, and has been sent on pdf-archive.com on 28/11/2015 at 06:08, from IP address 39.32.x.x. The current document download page has been viewed 431 times.
File size: 7.6 MB (37 pages).
Privacy: public file




Download original PDF file









Document preview




STATE OF INTERNAL AUDIT IN PAKISTAN

Table of Contents
Message From CEO .........................................................................2
Key Findings-Analysis and Insights………..........……………...…….3
The Ambition of Internal Audit Functions… .................................4
Process Improvement and Value Addition ..................................4
Implementation of Outstanding Recommendations ....................5
Effective Stakeholder Engagement ...............................................6
Areas For Improvement ..............................................................7
Factors Differentiating The Value Providers With Others ..........8
Risk Based Work ......................................................................8
Staff Skill Set Diversification .....................................................9
Effective Stakeholder Engagement...........................................10
Detailed Survey Responses…………………………………...…...…11
People and Organization.…………………………………...……11
Work Management………………………….……...……….….…16
Issues and Challenges……………………………….………….…24
Survey Demographics ...................................................................31



STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

1

Message from CEO
Internal Auditors carry a unique role in the organizations they serve. The role gives them the
right to understand, analyze and provide input for improvement in
the way the organization functions. However, with the luxury of
having such an opportunity at hand, they are seldom considered as
the integrators of value addition.
The need to turn this around was never more required!

To contribute in meeting this challenge, we engaged more than 100
organizations across various industries and sizes in Pakistan and
conducted a survey to see where the Internal Audit functions stand today. The initiative built
on the theme of “Better Governance Prosperous Pakistan” is the first of its kind in the
country and envisions to make strong Internal Audit functions for better governed
organizations and the country.
The report aims to provide self-assessment opportunity to the Internal Audit functions, and
suggest ways to move forward for meeting the challenges they encounter in today’s world.
Each individual company can assess as to where it stands in comparison to the rest operating
in the same environment. Further, insights and opinions of the subject matter experts,
practitioners and stakeholders are made part of the report. These can be used as a source of
guidance for setting the future course of action.
I would like to add here that the pace with which the new business models are emerging,
the battle which the organizations are fighting on the data security front, complexity in
operating models, free and rapid flow of information with a blink of an eye and increased
awareness amongst the customers coupled with strong regulatory regimes are just the few
challenges organizations have to cope with. Unless and until Internal Auditors’ work is
related to these; they would just be considered as a cost of doing the business and nothing
more.
I sincerely hope that Internal Auditors, Management and members of the Audit Committees
would find this report useful in making their organization more effective.
.

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

2

1 Key Findings

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

3

The Ambition of Internal Audit Functions
Process Improvement and Value
Addition
More focus on process improvement and
value addition is the top priority according
to the survey results. Audit functions have
been generally guilty of being compliance
oriented and there are chances of them
becoming irrelevant if they do not pursue
that goal with full zeal.
While pursuing this goal the key is to
maintain a right balance between the risk
mitigation and the significance of business
objectives. As an Internal Auditor one
needs to be aware of the linkages between
the control and the risks, does that align
with the risk, is it too much, too low or at a sufficient level. Removing the unnecessary steps
in a process could be a big relief for the process owners/managers.
Secondly, Internal Audit functions should strive to understand the linkages of business
processes with the organizational key objectives. For example, if an organizations key
strategic objective is the improvement in customer service, understanding of the end to end
process which have connections with the customer is critical. The process will definitely not
end at the Customer service department but cascade down to Technology, Finance and
others as well. Understanding the complete value chain is thus of paramount importance to
contribute something in the achievement of business objectives.
Last, but not the least Audit report is the product through which Internal Auditors will be
recognized. Whether the value has been added to organization or not does not end in
identifying the issue, in fact it begins from there, the real success will be gauged by how
practical the recommendation is. During our discussion with Sardar Muhammad Abubakr,
he highlighted the same point and provided a simple barometer of assessing whether you
have added the value or not by saying:
“If your recommendations outshine the observations in an Audit report, it means you have
added value”
Sardar Muhammad Abubakr

(Director Strategy and former Internal Audit Head, Telenor)

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

4

Implementation of Outstanding Recommendations

This goal which seems more like an issue has
emerged as the 2nd top most priority for Internal
Audit functions to pursue in the coming years.
There are two key dimensions which the Internal
Auditors in our opinion need to look at to assess
their own situations.

“Internal Audit reports should be a balanced
depiction of processes and controls, not just
the issues. The tangible positives should also
be highlighted in the Internal Audit report”

Creating the acceptability

The Follow up process

In order to create the acceptability of the
observations one need to look at as to How
interactive the process is between Internal Auditors
and the management to conclude the
recommendations

The effectiveness of a follow up process has
direct relationship with the implementation
of outstanding recommendations.

While the management can always argue about the
auditors’ judgment and their lack of business
understanding, Internal Auditors should strive to
create a true level of management’s acceptability
for the implementation of recommendations on
timely basis. Recommendations must be well
thought out considering the business dynamics
and are open to discussion with management.
Another dimension which we tend to over look is
the magic of positive reporting. More often than
not Internal Audit report begins with all the red
marked observations. It creates the perception as if
Internal Auditors sole objective was to to identify
all the wrong doings. Surely, there must be
something good happening and that also needs to
be highlighted in the report to create a comforting
environment with the management.

Sardar Muhammad Abubakr

(Director Strategy and former Internal Audit Head,
Telenor)

Outstanding recommendations can sum up
to hundreds with multiple people carrying
on the responsibility. Most of the
organizations which we have talked to on
the subject have manual process where
excel sheets are maintained and emails are
required to be sent to the auditees. Internal
Auditors should actively look to bring
improvement and automation in their own
processes. They may consider to use an
Internal Audit Management Solution for the
purpose. One which can tackle the follow
up process by sending out the automated
reminders on a given date to the auditees
and provide a complete status of
outstanding recommendations by various
dimensions at a click of a button.
Internal Auditors can also look into the
option of holding regular meetings with the
departmental heads to provide the status of
their respective departments.

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

5

Effective Stakeholder Engagement
Internal Audit is perhaps the only
function in an organization which
almost deals with each component of
the organization be it the Audit
Committee, Departmental heads, CEO
or the functional teams.

The same views were echoed by Mr. Nadeem
Khan, CFO Ufone. According to him
“Internal auditors need to explain the relationship
of controls with the achievement of objectives of
the relevant department/function. This is critical
to foster effective stakeholder engagement."

There is a need to have a genuine
awareness that each one identified
above are the stakeholders for Internal
Auditors, their expectations need to be
understood and an effort should be
made to eliminate the gaps in them, if
any.
As rightly put by Norman Marks
“Internal Auditors need to remember
these 5 words “WIIFM” which stand
for “What’s in it for me”.
It is of critical importance that the
points
highlighted
by
Internal
Auditors also demonstrate as to how
addressing them will help the
management in the achievement of
their business objectives.
If we are to influence others, we need
to show that it is in their own best
interests, whether as an individual
manager or the leader of a team, to
implement our recommendations. We
need to appeal to their "WIIFM". If
there is no value to them, why would
they make a change?”

“Internal Auditors provide an additional comfort
to CFOs' when they give visibility on the
effectiveness of controls which operate outside
finance function but have a financial impact for
the organization."
Mr. Nadeem Khan
(CFO, Ufone)

Norman Marks



CPA, CRMA
Author, Evangelist and Mentor for Better Run
Business
OCEG Fellow, Honorary Fellow of the Institute of
Risk Management

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

6

Areas For Improvement

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

7

Factors Differentiating the Value Providers with Others

Effective
Stakeholder
Engagement

Staff Skill set
Diversification

Risk Based Work

Risk Based Work
The internal audit heads were asked whether they are satisfied with their internal audit plan
being risk based and covers the critical risks faced by the organization including the strategic,
operational, reporting and compliance.

Others

40%

Value Providers

60%

69%

0%

20%

40%
Satisfied

31%

60%

80%

100%

120%

Not Satisfied

Amongst those Internal Audit functions which are perceived as Trusted Business Advisors &
Improvement catalysts (Value Providers), 69% of them were satisfied that their plan is risk
based in comparison to 40% satisfaction amongst the group of compliance oriented
functions (Others).
An important aspect of value creation is the identification, assessment and response to the
risks that are faced by the organizations. As a trusted business advisor Internal Audit function
ensures that it provides valuable input regarding the management of all major risks that the
organization faces. This is the role that has to be effectively taken up by the Internal Audit
functions around the globe in the modern day business environment, an environment that
keeps evolving; exposing the organization to greater challenges.

STATE OF INTERNAL AUDIT IN PAKISTAN – FIRST SURVEY REPORT

8


Related documents


ist survey report state of internal audit in pakistan
phil govt internal audit manual
dawgen global services
boomr dcaa compliance time tracking tips
audit management software
it grc tools key issues trends


Related keywords