CONNECT WITH THE IIA CHICAGO #IIACHI 1

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1 Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 1

2 Building Your Internal Audit Toolkit to Become the Auditor of the Future JIM HANNAN NATIONAL PRACTICE DIRECTOR IFG FINANCE AND ACCOUNTING AND RISK SOLUTIONS RAJ V. NAGARAJAN SENIOR VICE PRESIDENT CHIEF AUDIT EXECUTIVE WINTRUST FINANCIAL CORPORATION Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 2

3 Agenda and Objectives: Building Your Internal Audit Toolkit to Become the Auditor of the Future What is the Auditor of the Future? What skills will you need? How to you build these skills? Audit Basics what makes a good auditor? Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 3

4 Auditor of the Future Audit Fundamentals Agile and responsive Understands Organizational Needs and the Business Understands Business Processes Understands IT systems Uses Technology Communicates Effectively Innovative Creating tools in each of these areas will prepare you for the future of auditing Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 4

5 Audit Fundamentals Understanding the risks and audit objectives Designing and Performing Audit Procedures Gathering the Evidence and Identifying issues Dealing with People: Being efficient with people s time Getting information from people Being organized and good documentation Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 5

6 Understanding the Risks and Audit Objectives Risks and objectives are the why and what of an audit Audits are planned as the result of a risk assessment The risks identified have been assessed to be a high priority, or the audit would not have been planned How do we understand the risks? How do the risks relate to the audit objectives? Discussing risks with management and process owners Not everyone may see the risk Dealing with so what Understanding the risks and objectives will help direct your efforts and keep you focused on the audit objectives Experience with risks is an essential tool in your toolkit Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 6

7 Designing and Performing Audit Procedures Beginning with the Risks and Objectives Understanding the Process Understanding the Systems Understand how the risks are managed Asking the Right Questions What is the population? What is the inverse of the population? Being creative Using technology Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 7

8 Gathering the Evidence and Identifying Issues Going beyond audit exceptions Asking the Right Questions, again What is not there that should be? Is there an elephant in the room? Sorting through the noise Seeing the Big Picture Missing the forest for the trees Denial and resistance Is that a real bear about to eat this man? Developing the ability to find and identify issues is an important tool in your toolkit Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 8

9 Dealing with People Coordinating audit work with work schedules De-personalize Developing a relationship with the auditee Getting people to help you Finding allies Interviewing Skills Asking the Right Questions, again The brush-off and hostile auditees Not everyone appreciates being audited Develop relationships with auditees and throughout the organization - Effectiveness in dealing with People can be the difference between an impactful audit and a bust Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI 9

10 Communicates Effectively Written Communication Verbal Communication Timely Communication Cutting through the clutter Concision CONNECT WITH THE IIA CHICAGO #IIACHI Institute of Internal Auditors

11 Agile and Responsive Agility: the ability to move quickly and easily. Responding to events and changes Doing the work better and faster Measure the audit process where is time spent and how can time be reduced Targeted quick hit audits Using Technology Using Agile Methodology Requirements and solutions evolve based on need Collaborative and adaptive Rapid and flexible response to changes Adaptive planning, evolutionary development, empirical knowledge, and continual improvement, and it encourages rapid and flexible response to change Developing agile capabilities is a tool that can be applied to many situations to produce results faster Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

12 Understanding Organizational Needs What is the organization s mission and strategy? How does audit adds value? What are the key areas of focus of IA department and organizational needs? Understanding the audit plan and why Linking our activities with the how audit adds value and the organization s mission and strategy makes us more valuable Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

13 Understanding Business Processes How does the business operate? Standard Business Processes more similarities than differences Industry Unique Processes Organizationally Unique Processes Best Practices Common Issues Mapping out the Process Understanding how Business processes work as well as what can go wrong is an important tool in your kit Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

14 Understanding IT Systems What systems are being used? How and Where do systems store Data? How is data processed by the systems? How do systems link and work together? Understanding Risks Cybersecurity Cloud Assessments Understanding how IT Systems work as well as what can go wrong is an important tool in your kit Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

15 Uses Technology GRC Tools Understanding and Getting Data Advanced Excel Data Analytics Tools Predictive Analytics Robotic Process Automation (RPA) Cognitive Intelligence Reporting Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

16 GRC Tools Can support comprehensive view of audit universe Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 16

17 Data Analytics Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 17

18 Getting Data Knowing the systems used Understanding the Data Getting Access to the Data Using your relationships Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 18

19 Advanced Excel Having advanced Excel skills is extremely useful in internal and other areas as well Excel can be used for data analytics by sorting, comparing, summarizing and filtering data Become knowledgeable about the many operations on the data and formulas menus and how to use pivot tables VLOOKUP, pivot tables, SUMPRODUCT, logical statements such as IF and writing complex formulas are just a few examples of advanced excel Becoming the Go-To person to perform advanced excel work makes you extremely valuable is an important tool to add to your kit Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 19

20 Data Analytics Tools To perform advanced data analytics, excel has limitations especially when applying complex logic, comparing multiple elements and using very large sets of data Commonly used data analytics tools include ACL and IDEA Using these tools, especially ACL, requires some knowledge of programming Many internal audit departments struggle to effectively use these tools due to the investments required to learn how to use them, write the scripts, obtain the data and then analyze the results Knowing how to effectively use these data analytics tools makes you extremely valuable is an important tool to add to your kit Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 20

21 Analyzing Data Understanding what you re looking for What is the data telling you? Anomalies Seeing the signal in the noise Knowing how to analyze data will Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 21

22 Predictive Analytics Predictive analytics is the branch of the advanced analytics which is used to make predictions about unknown future events. Predictive analytics uses many techniques from data mining, statistics, modeling, machine learning, and artificial intelligence to analyze current data to make predictions about future. Using Predictive Analytics in Internal Audit Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 22

23 Robotics and Cognitive Intelligence Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 23

24 Robotics process Automation (RPA) Many companies are deploying RPA to automate tasks RPA is still in its early stages but is expected to grow exponentially Companies initially struggling with ROI on RPA Candidates for RPA are repetitive, standardized tasks that take up significant time and are performed on a large scale consistent tasks Using RPA in Internal Audit Providing assurance regarding RPA Internal Auditors will need to become proficient in RPA software and how RPA is deployed Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 24

25 Machine Learning and Artificial Intelligence As is well known, AI is making great strides and machines are capable of performing very advanced functions such as driving a car AI is still in its early stages Using AI and machine learning in Internal Audit Providing assurance regarding AI and machine learning Data Quality Internal Auditors will need to become proficient in how AI is deployed Institute of Internal Auditors 2019 IIA CHICAGO CHAPTER JOIN 25

26 Innovates Develops new Ways of doing things Uses creative approaches How to foster creativity Finding your voice 26 Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

27 Putting it all Together - Auditor of the Future Audit Fundamentals Agile and responsive Understands Organizational Needs and the Business Understands Business Processes Understands IT systems Uses Technology Communicates Effectively Innovative Creating tools in each of these areas will prepare you for the future of auditing Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

28 Agenda: Building Your Internal Audit Toolkit to Become the Auditor of the Future The Auditor of the Future Audit Basics Understanding the Needs of the Organization How to Equip Yourself to Address the Organization s Needs Technology and Audit Other Areas Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

29 Questions and Answers? END OF PRESENTATION Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI

30 Thank you for your time and attention! IIA CHAPTER CHICAGO 59 TH ANNUAL SEMINAR Institute of Internal Auditors 2019 CONNECT WITH THE IIA CHICAGO #IIACHI