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Organisations can benefit enormously from establishing an effective internal audit function. The increasing emphasis on good corporate governance following recent business collapses and other corporate scandals is one reason to establish an internal audit function, as it can ensure that the company’s systems of internal controls are appropriate and functioning properly. Publications relating to Internal Audit and Risk and Controls Assessment are as follows:
September 2003
___________________________________________________ Internal Audit's Role in Modern Corporate Governance Recent events have prompted many boards to review the role of internal audit in supporting a robust risk management and internal control environment. As part of this review, boards are considering how to satisfy themselves that internal audit is functioning effectively and efficiently. Many are also considering whether the current reporting lines for the function are appropriate. In discussing these issues, this white paper draws on our insights and experiences working with boards and internal audit functions, as well as providing internal audit services, to clients in a broad range of industries.
___________________________________________________ Understanding Enterprise Risk Management: An Emerging Model for Building Shareholder Value Business leaders have discovered that a risk focus can be used to build shareholder value. The KPMG white paper, Enterprise Risk Management: An Emerging Model for Building Shareholder Value, addresses how organisations can create opportunity from risk to drive business value. The paper describes the current risk management environment and how organisations are deploying enterprise risk management ("ERM"). To help organisations translate the ERM concept into concrete action, the paper outlines an ERM model which expands on the tools and techniques currently in use. The model ties ERM to business strategy; it provides clear, actionable steps, and a checklist to help business leaders get started.
___________________________________________________ New Strategies and Best Practices in Internal Audit: An Emerging Model for Building Organisational Value Focusing on Risk This publication discusses how organisations benefit from an internal audit function that focuses on organisational strategies and risks. Its intended audience are CEOs, COOs, CFOs, Internal Audit Directors, board members and Audit Committee members. The new internal audit model is that of a future-focused "risk authority" which can help insightful corporate leaders manage business risks as well as protect and enhance shareholder value.
_____________________________________________________ Comprehensive Business Risks Assessment With effect from May 1998, the Stock Exchange of Hong Kong ("SEHK") announced an amendment to Appendix 14 of the Listing Rules, which specifically relates to the Code of Best Practice, under which every listed issuer is to establish an Audit Committee with written terms of reference that clearly define its authority and duties. Risk management is at the forefront of senior management priorities and there is an accelerated need to have focused resources to manage business priorities. Management needs to improve the link between organisation goals and supporting business processes and to increase earnings by improving the efficiency and effectiveness of internal controls embedded in each business process. Comprehensive Business Risks Assessment
_______________________________________________________ Control and Risk Self Assessment Company directors and management are responsible for establishing an appropriate system of internal controls and for reporting on its effectiveness. The level of assurance provided by traditional financial compliance testing is significantly less than that expected by company directors and management. Organisations around the world are looking for a new approach to control and risk management. Control and Risk Self Assessment ("CRSA") provides a framework for business process owners to review, assess and design optimal controls to manage risks and achieve the company's objectives. It reinforces the need for business process owners to have responsibility for implementing and monitoring risk and related controls, and for internal audit to have a quality assurance role. Control
and Risk Self Assessment ________________________________________________________ Setting up an Internal Audit Function With the growing focus on corporate governance issues, organisations are increasingly exploring the potential benefits to be gained from establishing an effective internal audit function. Adopting a business oriented approach can assist an organisation in determining the resource requirements and developing an operating plan. Setting
up an Internal Audit Function _______________________________________________________ Internal Audit Strategic Performance Review Many organisations are increasingly relying on their internal audit function to help put their key success factors, including workforce effectiveness, business processes efficiency, and strategic positioning, into meaningful business contexts. However, until it has a clear picture of its own people, processes and positioning, internal audit's contribution and, ultimately, its strategic value to the organisation can be significantly hampered. The internal audit functions that provide the greatest value to senior management will be those that have a clear picture of their own value and a vision for rapidly increasing it. Internal
Audit Strategic Performance Review _______________________________________________________ Re-engineering the Internal Audit Function Traditionally, the primary objectives of internal audit were directed at the evaluation of financial compliance, assessing the reliability of financial information and complementing the work of external auditors. However, the role and nature of internal audit is rapidly changing. Financial and compliance testing are not enough to satisfy today’s management. Organisations are expecting their internal audit functions to add value by being more operationally focused. Reengineering
the Internal Audit Function _______________________________________________________ Strengthening Internal Audit through Co-sourcing Many internal audit departments do not have professionals with all of the skills and experience necessary to meet management's increasing demands for value from the internal audit function. Some internal audit departments do not have enough staff to handle all their internal audit projects. In response, many leading organisations co-source their internal audit work to outside service providers. Please contact the HKACI at hkaci@kpmg.com.hk with any questions or comments. Strengthening
Internal Audit through Co-sourcing _______________________________________________________
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