Core Principles of Internal Auditing

Introduction

Today’s business environment subjects companies to considerable scrutiny, making it essential for internal auditing to not only meet but exceed standards.

This Core Principles of Internal Auditing course is designed to ensure that all internal auditing systems within an organization are aligned with expected standards.

Beyond traditional accounting, this course offers insights into the managerial, political, and technical aspects of internal auditing, providing a deeper understanding than conventional approaches.

Internal auditing involves providing managers with critical accounting and non-accounting information that cannot be obtained externally. This course draws on cross-functional knowledge to implement an effective internal audit management program. Essential skills such as audit evidence collection, risk assessment, and audit report writing will be covered, enhancing your internal auditing expertise.

Objectives

By the end of this Core Principles of Internal Auditing course, participants will be able to:

• Understand and explain the fundamentals of internal auditing and internal control.
• Identify “high-risk” processes and design control mechanisms to manage these processes effectively.
• Recommend audit controls that support management in operationalizing both tactical and strategic plans.
• Advocate for the return on investment in internal auditing in relation to resources used.
• Evaluate the effectiveness and efficiency of documenting internal control systems.
• Understand the principles of audit evidence and concepts of audit sampling.

Training Methodology

• Lecture and discussion to encourage participant feedback
• Real-time examples to support theoretical learning
• Teamwork and peer learning
• Simulation of internal audit processes
• Coordination and critique of participant work
• Ongoing tests and exercises
• Final presentation of projects following course norms

Course Outline

Unit 1: Internal Auditing and the International Business Environment

• Define internal auditing.
• Discuss practical elements of internal auditing.
• Elucidate the role of management in internal audit functions within an organization.
• Compare internal auditing with external auditing.
• Outline the classifications of internal government audits.

Unit 2: The Road Map to Effective Internal Audits

• Identify fundamental characteristics of effective audits.
• Explain alpha and beta audit risks.
• Administer compliance, substantive, and operational tests.
• Assess audit risk.
• Outline the relationship between the internal control environment and audit testing approaches.

Unit 3: Focusing the Investment in Internal Audit

• Explain the relationship between internal audit strategies and the audit planning process.
• Formulate a long-range internal audit plan based on risk evaluation of internal controls.
• Prepare an audit plan and audit planning memorandum for individual internal audit projects.

Unit 4: Documenting and Assessing the Internal Control Systems

• Familiarize with work processes.
• Prepare written accounts of work processes.
• Create flow diagrams, photographs, and process outlines.
• Complete the internal auditor’s internal control documentation matrix.
• Define the audit purposes.

Unit 5: Audit Evidence and Audit Sampling

• Examine key aspects of audit evidence and their impact on audit work papers.
• Prepare analytical reviews.
• Implement and collect audit evidence.
• Record and perform compliance and substantive tests.
• Determine the correct items to test.
• Discuss statistical sampling techniques.
• State the purpose of sampling procedures.
• Create a sampling plan.
• Utilize attributes sampling.
• Extrapolate results from a sample to the population.
• Evaluate the connections between audit work papers and the conclusions and recommendations.

Unit 6: Audit Interviews Planning and Execution

• Prepare interviews.
• Plan, conduct, and analyze interview outcomes systematically.
• Address objections and resolve disputes with management.
• Listen effectively and communicate in a non-threatening manner.
• Close interviews effectively.
• Handle confidential information appropriately.

Unit 7: Managing and Monitoring Internal Audit Examinations and Ensuring Credibility for the Internal Audit Team

• Prepare the agenda for the initial audit conference.
• Gather useful information during the internal audit process.
• Adhere to standards and ethics in internal auditing documentation.
• Utilize methods and resources to ensure audit success.
• Consider parameters for assuring stakeholders of the internal audit team’s credibility.

Unit 8: Issuing Reports of Audit Findings

• Conduct the exit debriefing meeting.
• Apply effective management practices in developing adequate internal controls.
• Report audit conclusions and highlight areas needing further attention.
• Arrange the audit exit debriefing conference.
• Submit the final internal audit report to the organization.
• Perform a post-audit review.
• Update the board on internal controls.
• Address audit risk developments and upcoming projects.