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建立一个有效的内部审计部门 ESTABLISHING&nbs

2017-09-05 01:35 毕业

ESTABLISHING AN EFFECTIVE Internal Audit Department

Hugh D Pforsich，Bonita K Peterson Kramer，G Randolph Just：Strategic Finance.，Montvale：Apr 2006.Vol.87，Iss.10；pg.22，8pgs

Abstract
If you are wondering how to establish an effective internal audit department (IAD), The Schwan Food Co did just that with the help of Randy Just when he was the chief audit executive (CAE) at the company. Finding a qualified department head is a crucial first task in establishing an effective IAD. Once the CAE is hired, he/she should lead the development of the written audit charter, which sets forth the purpose, authority, and responsibilities of the IAD. Once the staffing was completed, Just worked with two of his managers to develop a risk-based assessment methodology tied to the Committee of Sponsoring Organizations of the Treadway Commission internal control framework and a consumer products business process model. The risk assessment framework closely incorporated the concepts of risk and control. In its first year, the department received a large number of requests for other projects, and that was clearly viewed as a substantial measure of success.
Full test
The demand for internal auditing services has skyrocketed with two recent events.
First, Section 404 of the Sarbanes-Oxley Act (SOX) mandated public companies to include with their annual report an internal control report that contains an assessment by management of the effectiveness of the company's financial reporting internal control system. Internal auditors have the technical expertise and professional objectivity to assist in this assessment process.
Second, the New York Stock Exchange required all listed companies to "maintain an internal audit function to provide management and the audit committee with ongoing assessments of the company's risk management processes and system of internal control" by October 31, 2004. But the benefits of an internal audit department aren't unique to public companies. They are also applicable to private companies. （科教范文网 fw.nseac.com编辑发布）
If you are wondering how to establish an effective internal audit department, The Schwan Food Company did just that with the help of Randy Just, one of the coauthors of this article, when he was the chief audit executive (CAE) at the company. Sadly, Randy died unexpectedly in January. He added a tremendous amount to the body of knowledge on establishing an effective internal audit department, and his contributions will be sorely missed. His co-authors dedicate this article to his memory.
WHY ESTABLISH AN INTERNAL AUDIT DEPARTMENT?
The motto of the internal audit department (IAD) at Schwan is "advancing the business." There are a multitude of ways in which internal auditors can help accomplish that objective. First, an effective IAD can help a company reach its goals by helping management improve controls, business processes, and business risk management. second, internal auditors serve a critical role as part of the corporate governance structure by ensuring that the company achieves its objectives in an ethical, legal, and well-governed manner.
Third, internal auditors help fight the battle against fraud. In 2004, the Association of Certified Fraud Examiners (ACFE) obtained data on 508 fraud cases totaling more than $761 million in losses. In the resulting 2004 Report to the Nation, the ACFE stated that approximately 57% of the victim organizations in its study had an internal audit function and that those organizations suffered a median fraud loss of $80,000 compared to median losses of $130,000 for companies without internal audit departments. This result is similar to the ACFE's 2002 study where the median fraud losses were $87,500 for entities with internal auditors vs. $153,000 for those without.
The IAD is a critical part of corporate governance along with senior management, the audit committee, and the external auditors. Internal auditors can be considered the eyes and ears of management as well as the corporate conscience. Given its importance, how should a company begin to establish an effective IAD?

START WITH THE LEADER
Finding a qualified department head is a crucial first task. Not only should the chief audit executive possess the necessary internal audit technical skills, but he or she should also be able to gain respect from both management and the audit committee. Good communication skills, objectivity, and strong moral character are also desirable characteristics.
The creation of Schwan's IAD was driven by personnel changes in top management. The first nonfamily-member CEO, who had a long and distinguished career in the food business, came on board in 1999. At about the same time, a new audit committee chair began his service. In 2002, a new CFO was hired who had extensive public accounting experience.
This new leadership helped the company slowly make changes. It improved the governance structure by establishing an internal audit department while retaining the positive aspects of the company's corporate culture, including its high standards of ethics, values, and hard work. Thus, the creation of the IAD was part of a company-wide effort to improve control and governance structures for a privately held but global company that had the goal of doubling in size from 2002 to 2007.
After conducting a regional and national search through a recruiting firm, the management team chose Randy Just to be their CAE. He brought with him extensive public accounting and internal auditing experience.
THE CHARTER AND MISSION
Once the CAE is hired, he/she should lead the development of the written audit charter, which sets forth the purpose, authority, and responsibilities of the IAD. Such a charter, which should be approved by the audit committee on behalf of the board of directors, is crucial for sending the message throughout the organization that internal auditing is viewed as a priority and has the endorsement of both executive management and the audit committee.
The charter should also clearly establish the independence of the IAD because it's critical that internal auditors be organizationally independent of management in order to enhance their effectiveness. This independence allows the auditors to perform their work objectively and without bias or concern that they would be unduly influenced by management.

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Schwan decided its IAD should report directly to the CFO for administrative purposes. For purposes of governance, it established an advisory relationship between the IAD and the board's audit committee. But these relationships, whether direct reporting or advisory, were flexible, depending on the styles of individual managers. Schwan's audit committee chair was very "hands on" and viewed his relationship with the IAD to be as direct as the CFO/IAD relationship.
The audit charter protected the IAD's independence by ensuring full access by the CAE to the audit committee and protecting the CAE from removal without the approval of the audit committee. In addition, Schwan's audit committee charter established that the IAD was accountable to the board of directors through the audit committee.
The IAD mission statement should be specified in the charter. The mission of Schwan's IAD was:
"To provide independent, objective assurance services designed to add value and improve the Schwan Company's operations. The IAD helps the organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the overall control environment and the network of enterprise business risk management control and governance processes."
This mission statement is almost verbatim with the Institute of Internal Auditors' approved definition of the purpose of internal auditing. In other words, the department's mission corresponds with Schwan's overall mission in that the IAD exists to help the company re

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