2014 Global Council. Dubai, UAE 6-9 March 2014 DAY 2. globaliia.org

Transcription

1 2014 Global Council Dubai, UAE 6-9 March 2014 DAY 2

2 Opening Remarks Paul J. Sobel, Chairman of the Board

3 Agenda - Tuesday Opening Remarks P. Sobel Expanding the Umbrella of the IIA D. Beran Tuesday Discussion Topics: Reassessing IPPF L. Harrington Membership Value Proposition H. Silverman Feedback Forum and Closing Session P. Sobel Open Evening

4 Umbrella Project Expanded Services

5 Agenda Expanded Service Project Overview Timelines/Actions Taken Since Global Council What We Have Learned from Recent Study Discussion Points

6 EXPANDED SERVICES PROJECT OVERVIEW Goal B of Global Strategic Plan The IIA will deliver the value that compels current, future and former internal auditors to be members (Membership/Value Proposition) Strategy B3 Address the needs of different sectors within the internal audit or related professional activities.

7 Objective Objective Identify and recommend potential options on how best to implement Strategy B.3 Address the needs of different sectors within the internal audit or related professional activities, while ensuring that The IIA also fulfills its core mission of providing dynamic leadership for the global profession of internal auditing. Phase 1 Address the disciplines in the 2 nd line of defense (LOD) of the Three Lines of Defense Model, which are most aligned to The IIA s current constituents Risk Management, Compliance, Internal Control

8 Timeline Prior to Global Council 2013 Strategy Refresh Mtg. Addressing the Needs of Diff. Sectors Oct Global Council High Priority for Additional Analysis Feb BOD Mtg. Proceed with Further Analysis Nov Do Nothing Was Not An Option Move Forward with Additional Analysis 8

9 Timeline Global Council 2013 July 2013 EC Mtg. Approved $150k Initial Invest March 2013 Oct Assessed Competitive Landscape July Phased Approach Market Research, Concept Plan, Business Plan April 2013 EC Mtg. Approved Approach IA s Current & Future Role in 2 nd LOD July 2013 Identified and reviewed 160+ organizations serving disciplines in the 2 nd LOD. Determined that additional research was needed to further understand IA S current and future involvement in 2 nd LOD 9

10 Timeline Current State Assessing Roles of IA in 2 nd LOD Study Aug 2013-March 2014 Recommendation to BOD July 2014 Global Council & EC Mtg. Input March 2014 This Week Understand the current and future roles of IA as it relates to risk management, internal control & compliance 10

11 Preliminary Survey Results EXPANDED ROLE OF INTERNAL AUDIT SURVEY

12 Purpose Survey Purpose of the Survey Understand current and future roles of internal audit as it relates to risk management, internal control and compliance.

13 Expanded Role Survey Preliminary Results 17 February 2014 January March 2014 Private and Publicly Traded Companies 17 Countries 6 Languages 500 Responses to 17 FEB 90% IA 74% CAE 95% Members

14 PRIMARY INDUSTRY Expanded Role Survey Preliminary Results 17 February 2014 Industry % Manufacturing 18% Energy & Resources Financial Services Retail & Entertainment 12% 10% 9% Healthcare 4% Technology 4% Logistics 3% Other 3%

15 Expanded Services Survey Preliminary Results 17 February 2014 Annual Revenue Revenue Less than US $10M 7% US $10M - US $ 50M 5% US $50M US $100M 5% US $100M - US $500M 12% US $500M - US $1B 14% US $1B US $10B 38% US $10B+ 19%

16 Initial Observations IA often has an extended role

17 Initial Observations IA often has an extended role, but usually not with primary lead responsibility IA faces broadly similar challenges across all three disciplines (risk management, internal control, compliance)

18 Opportunity Challenges in Carrying Out IA s Responsibilities (RM, IC, Compliance) Respondents Sited On Average Insufficient Experience & Expertise of Staff - 64% Extremely/Somewhat Challenging Insufficient Staff Professional Development - 56% Extremely/Somewhat Challenging

19 Initial Observations IA often has an extended role, but usually not with primary lead responsibility IA faces broadly similar challenges across all three disciplines (risk management, internal control, compliance) Professionals are interested in subject matter on each area

20 Opportunities Subject Matter Information Needed

21 High Degree of Confidence in The IIA Much More Likely to Rely on IIA for Information IIA Acctg Assoc

22 Initial Observations IA often has an extended role, but usually not with primary lead responsibility IA faces broadly similar challenges across all three disciplines (risk management, internal control, compliance) Professionals are interested in subject matter on each area Increased responsibilities are on the horizon

23 Future Changes in Responsibilities 6.5:1 9:1 20:1 Increase Decrease

24 13,000+ CRMAs Demand of CRMA being an indicator for risk management assurance content

25 43% ARE INCREASING THEIR AMOUNT OF EFFORT TO ASSESSING THEIR ORGANIZATIONS RISK MANAGEMENT EFFECTIVENESS

26 44% OF RESPONDENTS INDICATED THAT THEY WERE RECRUITING/BUILDING RISK MANAGEMENT SKILLS FOR THEIR AUDIT DEPARTMENTS

27 10% OF THE AVERAGE AUDIT PLAN IS DEDICATED PROVIDING RISK MANAGEMENT ASSURANCE

28 SUMMARY IA s Role is Expanding in 2 nd LoD Disciplines Challenge with Insufficient Expertise and Professional Development Demand for Leading Practices, Benchmarking, Evaluation Tools and Standards/Guidance. Risk Management Potentially Greatest Opportunity

29 Discussion Questions

30 Discussion Topic 3: Reassessing the IPPF Larry Harrington, Vice Chair Professional Practices

31 Drivers Regulatory influence Local guidance Industry specific requirements Standards too easy/too hard Minimum requirements or aspirational Maturity scale Forms of guidance, speed to market

32 Objectives Consider the evolving role of internal audit globally Consider the impact of elevating stakeholder expectations Propose updates to the structure of the IPPF that will encompass existing and developing global and local guidance to meet the needs of the profession for the foreseeable future

33 Scope Definition of Internal Auditing Foundational principles Direct linkage between standards and guidance Need to accommodate Industry specific guidance Regulations Local guidance Consideration of maturity models Enforcement of Standards Conform or explain Guidance development responsibilities

34 Key Players Steering Committee Taskforce global team of IA leaders: 5 United States 4 Europe 1 Africa 1 Australia 1 South America 1 Japan Project support from Ernst & Young Global Internal Audit Leader actively engaged IIA Staff Support

35 Progress to Date November 1-2, 2013 Taskforce meeting in Chicago Conceptual framework identified Taskforce to develop new Definition recommendations established February 6-7, 2014 Taskforce meeting in Dallas New definition drafted, minor work remaining Conceptual framework modified, refinement continues Principles of Internal Audit Effectiveness developed, mapping of Standards to Principles in process

36 Proposed New Definition Current 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. (45 words) Proposed Definition: Internal auditing is an objective assurance activity that benefits an organization by providing independent evaluations, advice, and insight on governance, risk management and internal control. (25 words)

37 Current Framework

38 Proposed Framework R E Q U I R E D R E C O M M E N D E D Definition of Internal Auditing Principles and Attributes of Internal Audit Effectiveness International Standards for the Professional Practice of Internal Auditing (The Standards) Interpretations to Support The Standards Implementation Guidance Supplemental Guidance C O D E O F E T H I C S

39 Proposed Framework R E Q U I R E D R E C O M M E N D E D Definition of Internal Auditing Principles and Attributes of Internal Audit Effectiveness International Standards for the Professional Practice of Internal Auditing (The Standards) Interpretations to Support The Standards Implementation Guidance Supplemental Guidance C O D E O F E T H I C S

40 Principles of Internal Audit Effectiveness 12 Principles: 3 about the individual 6 about the function 3 about the outputs/outcomes from the function

41 Principles of Internal Audit Effectiveness 1. Demonstrates uncompromised integrity. 2. Is objective in mind-set and approach. 3. Demonstrates commitment to ensuring competency of the entire internal audit activity. 4. Is appropriately positioned within the organization with sufficient organizational authority. 5. Is aligned strategically with the aims and goals of the enterprise. 6. Is sufficiently resourced to evaluate all significant risks. 7. Is committed to quality and continuous improvement within the internal audit activity. 8. Is efficient and effective in execution of all activities. 9. Is effective in communicating. 10.Provides reliable assurance to those charged with governance over the enterprise. 11.Is proactive, anticipatory and future-focused. 12.Enables positive change.

42 Timeline At its most aggressive Anticipate seeking Board approval for exposure of proposed framework at International Conference in July Receive and address exposure comments in second half of 2014 Final Board approval of new framework in December 2014 Population of new framework in 2015 New framework released January 2016

43 We Would Like Your Input Discussion questions in the Background Paper: 1. What is the current adoption rate of the Standards in your area of the world? 2. What, if anything, is preventing adoption by practitioners of the Standards, as well as the entire IPPF, in your country? 3. What are the strengths and weaknesses of the current IPPF structure? 4. Are you aware of any areas where government agencies have regulated, codified, or adopted any part of the IPPF into regulation, statute or law?

44 We Would Like Your Input Discussion questions in the Background Paper: 5. Are you aware of specific guidance that has been published that goes beyond the Standards or the IPPF that impact how internal auditing is to be conducted? 6. Based on your experience, are those charged with governance knowledgeable of the Standards? 7. If the Definition of Internal Audit and/or the structure of the IPPF were changed, how much of an impact, if any, would that create in your country?

45 We Would Like Your Input As well, any reactions you have to the work-inprocess : Definition Framework Principles Additionally, if your Institute is publishing local guidance, please share that with your table facilitator

46 Break and Discussion #3

47 Discussion Topic 4: Membership Value Proposition Harold Silverman, Vice-Chair, Global Services

48 Background Relevant IIA s Global Strategic Plan Goal B The IIA will deliver the value that compels current, future, and former internal auditors to be members. Initiatives so far: Alternative Member Servicing Models to support new or struggling Institutes, launched in 2014 The Umbrella Project to address the needs of related professionals in the field of risk management, control, and governance, first discussed at Global Council A study is underway to better understand the current state of affairs. To date, The IIA has never undertaken a worldwide initiative to specifically focus on the value proposition of membership.

49 2014 Global Council Discussions Focus Whether all Institutes are meeting the needs of internal audit professionals and what gaps may exist. What programs and services should be implemented to support and strengthen small and newer Institutes. Whether service delivery and membership benefits models in place are maximizing Institutes ability to recruit and retain members. Whether additional opportunities exist to better serve the needs of: Specific sectors within the internal audit activity. Internal audit professionals who rotate out of the profession. The student population.

50 Discussion Questions 1. What strategies does your Institute use to recruit and retain members? Please explain if these strategies have been effective or not. 2. What programs and services, if any, should The IIA develop to support small and newer Institutes? What role, if any, should the mature Institutes and regional organization play?

51 Discussion Questions 3. What is your biggest challenge regarding membership recruitment and retention? 4. If inability to offer value-added and tangible services is ranked high, please explain the reasons.

52 Discussion Questions 5. What key strategies, if any, should The IIA use to help: Increase the membership value proposition on a global basis? Grow membership on a global basis? Diversify membership on a global basis? 6. On a global basis, what is the most important strategy The IIA should focus on? 7. To support a global strategy regarding membership, do you see the value of all Institutes participating in coordinated membership recruitment, retention, and/or diversification efforts?

53 BREAK

54 Feedback Forum

55 Francis Nicholson, Managing Director of Certifications & Global Strategic Initiatives INTERNAL AUDIT LEADERSHIP PROGRAM

56 Internal audit leadership program Question What is it? Answer things we know A new program focusing on leadership capabilities as applied specifically to CAEs, in the key areas of: Leading the audit function Influencing strategy and organizational performance Providing opinion and insight Advocating innovation and change Promoting ethics and social responsibility Who is it for? Primary audience: Route 1: Aspiring future CAEs Secondary audience: Route 2: Long serving CAEs [credit given for experience] Route 3: New CAEs What are the entry requirements? Varies with route: Route 1: CIA + five years internal audit Route 2: 15 years management including three as CAE Route 3: 15 years management, now engaged as CAE

57 Internal audit leadership program Question How is it assessed? Answer things we know Assessing knowledge, understanding and behavior: Three written exams of between 3-4 hours each Presentation to a panel followed by questions 90-minute panel interview Who s on the panel? Experienced CAEs who have completed the new program In what countries? Exams will be available on-line globally Assessment for presentations and interviews will be available face to face and via WebEx In what languages? English only at launch with no immediate plans to translate to other languages (but longer term, subject to demand) When will it be available? Announced July 2014 First exams Autumn 2014 First presentation and interviews December 2014

58 Internal audit leadership program Question Answer not yet known What is it called? Clear, unambiguous and readily understood globally Reflect its uniqueness AND its place within the suite Will be abbreviated to a set of initials as a short-form title and as designatory letters (like CIA, CRMA, CFSA etc) The name will include: ONE of the following: o Certification, OR o Certified, OR o Qualification, OR o Qualified EITHER Audit OR Internal Audit EITHER Leadership OR Leader What is the fee? Delivery costs are significantly higher than the CIA Costs vary according to volumes and delivery models Fee must reflect the value

59 Margie Bastolla, Vice President - IIA Research Foundation CBOK 2015

60 Richard Chambers, President and CEO ALTERNATIVE MEMBER SERVICING MODEL

61 Gifts and Closing Session

62 Agenda - Wednesday Tour (for delegates and guests) of Old City Dubai Lunch Leave hotel by bus at 8.30 Return to hotel by 16.15

63 Thank You