Robert Pérez, owner, Pérez Communication Solutions
Deborah Poulalion, IIA senior data analyst, The IIA
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00:00:02
The Institute of Internal Auditors presents all things internal audit in this episode, Dirk to Bruni and Martin Grobler discussed the IAS recently released Quality Assessment Manual, 2024 edition with David Petruski. They share their personal experiences with quality assessments and the development of the updated manual, including how it aligns with the new global internal audit.
00:00:24
Nerds.
00:00:27
On.
00:00:27
Talking today with Martin Grobler and Dirk Bruni.
00:00:30
About the quality assessment manual, which the IIA recently published as global guidance.
00:00:36
And I want to start.
00:00:37
Off just by asking Martin and Dirk a little bit about their experiences with quality assessments. So this is a rather important project for the IA and.
00:00:47
Their involvement on the task force.
00:00:49
Was particularly or intentionally.
00:00:52
They were intentionally selected to be on the task force because of their experiences, and Martin in particular as a member of the International Internal Audit Standards Board. So Martin can tell us a little bit about his experience and his role on the project as a member of the ISB.
00:01:10
Thank you, David. Yes.
00:01:11
I've been a member of the ISB now for about four years. It's going on 4.
00:01:16
Is now, and it's been a fantastic journey that I've been part of the development of the new international standards for internal auditors and my past experiences in terms of EQ. Have been performing internal quality assessments now for the past 15 years. I'm currently busy with two at one stage.
00:01:36
And I was there about 8:00 during the course of this year already. And so things just keep rolling up and rolling on and everybody tries to get the QA is done. Now, just just before the new standards becomes effective.
00:01:48
But basically that's my background and I've been enjoying every moment of the your processes and and love giving back to to it and all the functions in terms of advice as to how they need to improve and I need to get up to the leading practice standards and requirements that we we are sending out there. So so kind of elevating that profession.
00:02:08
For everyone out there. Thanks David.
00:02:11
Sure. And and Dirk, can you tell us a little bit about your?
00:02:14
Background with quality assessments.
00:02:15
Translate.
00:02:16
Yeah, sure, David. Thanks for hosting me. So yeah, a little bit like Martin. I've also quite a lot of experience. Well, I would say over 30 years in, you know, external and internal auditing. And I had, I would say the about luxury and privilege last year to help you know with the with the publication of the international standards.
00:02:36
I would say about consultant to the Standards Board and from an experience from you know, external quality assessment I kind of started to to do some real.
00:02:46
Actually, although the objective was like Martin, you know, sharing my experience of 20 years in internal auditing and then yeah, just making sure that you know, when we do a quality assessment, well, we do a good quality review but also help contribute to the development of those internal audit functions.
00:03:07
Learnet, as the IASB's representative on the task force to develop the new quality assessment manual.
00:03:16
What what's your responsibilities? Did did you carry into that project? Then, on behalf of that board?
00:03:22
Or then constant questions from the listeners board in terms of what the progress is like and what we are focusing on. And I think the biggest responsibility is trying to to align the required or the requirements of the the quality Assessment Manual, but also the ideas in the direction of that manual.
00:03:41
To the discussions that was held around the board tables on a continuous basis in terms of the development of those standards. Now those standards came about getting into the background of the essence of what was trying, what what the Standards Board and these and all only trying to achieve with these standards.
00:04:02
Now that resonates within the quality assessment manual, so that feedback was a constant question that was that came about from from the Standards Board.
00:04:13
Yeah. Was there a particular area of the new quality assessment manual that that you focused on and that you emphasized in, in your participation on?
00:04:24
The the project.
00:04:25
Yeah, absolutely. So, well, I had the I, I would say the luxury to kind of focus on domain 2, the, the the ethics part because well partly it's well, it's part of my personality. I would say you know when when when you do a role.
00:04:39
Was the chief of the executive. You you have to do your assignment for the internal audit. But you have an important role to play in the ethical part. Development of the company. So writing that part was interesting and I think I would do a little bit share like with Martin, I think we had an interesting group working you know on the new quality assessment.
00:04:59
About the about people from the practice experienced very experienced, I would say, and then also I would say like with certain people from the academic or with an academic background. So I I think the combination of.
00:05:13
All that made that well, yeah, we we kind of reason in my opinion in fact the quality assessment manual. I think people will see issue with compare it I would say.
00:05:24
To the blue.
00:05:24
Book it's going to be kind of a revolutionary change in my opinion.
00:05:30
Thanks for that comment, because that that actually anticipates my next question, I was going to ask whether either one of you had experience in your your prior quality assessments using the prior version of the quality Assessment Manual, which is also.
00:05:43
Known as the Blue Book.
00:05:45
I'll take that one there if you don't mind.
00:05:50
The the Blue Book and it used to be a lot blue book previously and I think it was even a lighter blue book. The first versions that came out so I I couldn't using the initial first version of the Quality Assistant Manual way back when and and just a little bit of background and that my my mother was actually one of the writers of the initial quality.
00:06:10
There's the manual, and so she's credited with that one. And and now I take that. Ohh. This is forwarding to the Newport. We've been working with.
00:06:20
That for a long long.
00:06:21
So I mean.
00:06:22
And yeah, so so it's kind of a family business and a family oriented thing that hope I live up to the expectations that she said as well.
00:06:30
In terms of this.
00:06:32
Involvement of might be with the development of this new menu.
00:06:36
Not staying in dirt unit at.
00:06:40
Yeah, what I would.
00:06:41
Definitely like to add is in. In fact, and again it's common that we often get, you know, in our profession.
00:06:47
And it's just, you know, the negative comment to the Blue Book, but where, you know, in the past blue might be more considered a little bit like I think the box I think here not only did we revamp, I would say the content of the manual, but also kind of you know that you can use as a guidance to come to your conclusion and.
00:07:07
And I think for me, one of the good things maybe also the challenges is well, you're going to have to use your professional judgment in order to come to a conclusion. And and I think that is what's going to make it on one hand more challenging. But on the other hand, also more interesting you know from users and assessors.
00:07:26
You will.
00:07:28
Yes. So how do you think the new manual is aligned with the standards and and does that make the job of the assessment easier or does does it make it harder?
00:07:40
I'll start first. I think, well for me the well, the manual is totally aligned with the new standards. So that perspective, I think it makes it easy. I think about the beauty and the challenges that that you know we have the standards are.
00:07:54
And principle based rather than rule based and in order to come to, you know, or yeah, make it or probably the fair assessment or a right conclusion. It's going to use, yeah. You're going to have to use your professional judgment and and and looking on you know the facts and and what the topics your you're looking at.
00:08:13
You're assessing.
00:08:15
Yes.
00:08:17
Then if I may continue on to that aspect that they're like there's a perfect alignment, I think between the the new standards and the and the quality assessment manual, I mean, even the the domains that, that you'll find within the the standards or chapters within the new manual. So there's that direct correlation between two documents 2.
00:08:35
Practices. Although there's no copy and paste from the from the standards, the manual, the manual is more of a in-depth guide to internal order functions as well as the assessors as to how to go about not only conforming the standards and the rules of those standards, but actually to achieve those principles that has been set out.
00:08:56
In the in the in.
00:08:57
The sun, can it be used or can this methodology and the?
00:09:00
Manual be used?
00:09:01
For internal assessments as well as extern.
00:09:04
Yeah, I I see no reason why there would be a difference and and in fact I I would also like to build on on on what Martin said. Well, not only there's perfect alignment, but without trying to, you know, write and an audit manual or or an audit handbook, I think what we have tried, you know, as authors for the new quote manual is to kind of.
00:09:25
Give explanation. Pay the attention on the areas where you as an assessor or you know, as a user of the manual, in order to do your self evaluation, putting the attention to the points that you.
00:09:35
Need to look at that are critical.
00:09:37
To get conformance with the standards. So I think it can be without wanting to do a good peer-to-peer talk.
00:09:44
Here.
00:09:45
I think it's a good usage or a good tool for the auditors.
00:09:50
Were there parts of the quality assessment manual that that you particularly focused on or emphasize and an emphasis in the drafting?
00:10:00
Well, actually I assisted that good lineman with the mine too as well and but I had more of a overall view of all of the domains, the domain 2 was probably the most challenging 1 I think. Well, I wanna OK retract that let's say for for us. And then during the discussions the most challenging part of that.
00:10:20
I mean too, was the fact.
00:10:21
There's very there's a lot of aspects of the main view that you won't find documentary evidence of certain of those attributes that's needed for internal auditors and and how they act and and and how they they perform certain aspects of their job and and a lot of that information would be subjective.
00:10:42
Nature and you will obtain that information through the.
00:10:44
Passion was discussions with stakeholders and and that's where a lot of professional judgment from an internal, from an external quality assessment perspective will play a role and how you will interpret that information that you were seeing from through or through those discussions. That's what makes the assessment of the men to a little bit more tricky.
00:11:05
Than some of the other domains where you might have more documentary evidence.
00:11:09
Were there other?
00:11:10
Were some of the challenges in some of the other.
00:11:12
Domains you know for.
00:11:14
In terms of drafting, you know, methodology for assessing conformance or other significant issues in the other?
00:11:23
From my perspective, then, the other significant challenging the main was forming their main 3. Luckily we had a lot of.
00:11:30
Experts that worked on that domain and and hashed out all of the issues that they were, but I think there was specific challenge and how to assess and to at the end of the day, right internal functions when, when when a lot of the requirements or essential conditions as they are referred to in the new standards.
00:11:50
Are things that parties outside of the internal audit function actually needs to attend to and?
00:11:57
And it's not necessarily things that the internode function or the CAE, as an individual has a lot of control over. They need to give guidance and educate and get awareness for some of those sections within the mainstream and the right guidance in terms of that, I think was quite a challenge for for the.
00:12:18
Write the result with your manual as well.
00:12:20
Derek, is that? Oh, go ahead. You're gonna answer.
00:12:23
That yeah, I was going to say I definitely agree with Mark. And I remember on the mandate of the conversations we had on the mandate and and yeah, how that little yeah pieces together. I remember we had quite some intents, but good and constructive conversation. So definitely.
00:12:41
He agreed with Martin.
00:12:44
In your practice, is that a topic that comes up in, you know?
00:12:50
Assessments of the quality of internal audit functions right how their governance structure impacts the the quality of the function.
00:12:58
I'll grab this one for now. They're just you. You can have the next one initially. I'll grab this one for now. David. Yes, absolutely. There's a lot of discussions during Q AIDS that is happening specifically around the, the going forward, the main 3 conformance.
00:13:18
It's and it actually differs from organization to organization. Some organizations are more than comfortable with all of those requirements within domain three that we.
00:13:28
To the board and senior management. But some organizations there are concerns and and those concerns are very much related, more to the knowledge and the awareness and the expectations from other parties towards internal audit than it is to as to how they will conform. It's it's there's a lot of education.
00:13:48
Needs to happen from it into the audit side and I don't think internal auditors or TES generally are geared towards educating them more.
00:13:56
And and then analyzing and evaluating and then giving feedback in terms of that not really on the education part, creating that awareness. So it's.
00:14:04
A kind of a.
00:14:05
Change a mindset change that's needed from certain bodies within the mental function as well in order to to approach it in such a way that they they create that.
00:14:16
They if elevate that expectation of internal.
00:14:21
Did you see this? The methodology and the quality assessment manual creating new areas of emphasis for the assessment or I mean, you know, in, in alignment with the the new standards. But did you see that going forward quality assessments will be looking for different?
00:14:39
Things that than they were before or expecting different things out of the internal audit functions than than they might have compared to.
00:14:47
The old state.
00:14:49
Mm-hmm.
00:14:49
Well, I would.
00:14:50
Like to add and I I think we haven't talked and maybe about and what we would call the elephant in the room, the maturity model. I think we kind of added to some of the documents, you know assessment of the maturity.
00:15:01
We know it's still an area kind of well in development or to be development or to be developed further, but for me, I think that's that's kind of I'm not going to say new concept but a concept that that's kind of introduced with the new manual.
00:15:14
And I think, yeah, doing an assessment of that will kind of definitely help. I would say audit functions to yeah, to develop and to assess where they are and to some degree to see where, where, where do we want to be in the near future.
00:15:28
Can can you talk a little bit about Martin order about how the quality assessment manual incorporates maturity assessment into the quality assessment?
00:15:40
In the current of the new 2024 quality Assessment manual, there's kind of an introduction to maturity assessments, but maturity assessments has got a lot of nuances and different organizations and different levels of maturity that there might be with the all the requirements maturity for for internal audit function. So the the quantity assessment.
00:16:00
Annual currently is is light on garden.
00:16:04
These detailed gardens, let's put it that way, and detailed gardens as to how to go step by step in terms of maturity assessment, what in everything around a maturity assessment would entail. But it does provide and CAE and an internal function with some direction as to what needs to happen for a maturity assessment on that.
00:16:26
I think there's there's a lot of.
00:16:28
Of of additional information that can be developed around the maturity assessments as well as in terms of direction and and maybe templates and stuff and maturity assessments that's not included in this queue and manual, but that's something that I believe that that will be developed as time goes by. Well, hopefully in the near future.
00:16:50
And so you mentioned some of the templates that are accompanying the the new quality assessment manual and you know we've communicate public that they're, you know they're to enable, you know planning field work and reporting, talk a little bit about you know how you know the practitioner would.
00:17:09
Would use those.
00:17:10
Templates with the manual to conduct a quality assessment.
00:17:16
But what what I would say is I think, well, yeah, as a as a starter or some might be experienced, some might be less experienced. But I I think maybe a a prerequisite as well. Yeah have a good thorough understanding of the standards goes to some degree at the templates are really built upon the not only the structure but also the content of the new standards.
00:17:37
And I think if you master very well the standards by using the templates should be fairly easy in my opinion. So I think that's what we've tried to do. Really rewrite not only the manual, but you know, there's kind of a one to one between new standards.
00:17:54
Emanuel.
00:17:55
Yeah, please. David, can I just add to that? Yes. So the templates and the tools are fantastic and it's like Derek mentioned 100% aligned to the the new standards, but says the content and the content actually gives any assessor or even the the internal audit function CAE some guidance as to how to complete those templates and what is necessary to.
00:18:15
To really give an indication as to the level of achievement of certain standards and and eventually it builds up into the overall achievement of the principles that that's underpinned by those standards themselves, that's just what I wanted to add in terms of that, that.
00:18:30
7.
00:18:31
Yeah. And I I was maybe as a last point, indeed I think the the four point scale of rating well, yeah, that that should definitely help the assessor, whether it's for a self-assessment or not, it's going to definitely help the assessor to to to, yeah, to make his own conclusion and then see where he is at the end of the day.
00:18:49
So yeah, you, you, you bring up the uh four point conclusion scale which is new right. The previous version of the Quality Assessment Manual had three levels of conclusions. Sorry it was of general conformance partial conformance and does not conform.
00:19:08
That that.
00:19:09
But the new man, the new manual has four levels. Can you talk a little bit about why the you know, why 4 levels and and what you know?
00:19:16
What is that off?
00:19:18
I'll grab this one for now, though, and then you can add on if.
00:19:22
You want to.
00:19:23
Alright, so the the main reason I think we we went for the four level scale instead of the three level scale is to get something more definitive that as an outcome for it's an order functions a lot of.
00:19:34
It's an order functions.
00:19:35
That really, really well in terms of conformance in relation to the old rating scales and they will still just get a generally conformed rating and some it's an order function said. But I am fully conforming to everything. So please.
00:19:48
Develop something that actually speaks to us as those leading practice needs and all the functions as well. So I think that's one of the reasons that resulted in that four point scale coming out and the four point scale is now not not not any not focusing anymore on conformance but it's focusing on the achievements that the four point scale is now either you do not achieve.
00:20:09
And that talks about the achievement of the the standards and the principles. And then you've got a partial achievement and general achievement and then you have at the top of this right, it's kind of full achievement where the general achievement and full achievement would both be seen as a passing.
00:20:24
Maybe if you put it that way for internal audit functions, internal audit function should be striving towards that full achievement rating at the end of the day.
00:20:35
Another point of emphasis in the new standards is that quality and you know you know, conformance with the standards includes an element of the performance.
00:20:46
Function. Can you talk about, you know how that or the new quality assessment manual incorporates that assessment of performance or measurement of performance into the assessment of the functions quality?
00:21:01
This actually links on to the earlier question that you asked whether the new manual makes more difficult for quality assessors or doesn't make life easier for quality assessor.
00:21:12
Now that's kind of a depends question, but it specifically relates to this performance outcomes or quality outcomes where where the new standards like you mentioned talks about quality, which is performance plus conformance. It's not only conformance anymore, but so excellent assessors will have to look at it at the the approaches and the outlook.
00:21:33
Outcomes of internal functions not only from a performance perspective, but also from a performance perspective perspective, which is that achievement that relates to the achievement of those principles and standards.
00:21:45
Like I said it it could make life a little bit more difficult for a quality assessor to assess whether it's an organ function is not only conforming, but also performing in terms of certain aspects that links to those.
00:21:57
Principles.
00:21:58
The quality Assessment manual itself.
00:22:00
Gives some insights as to how to go about evaluating that performance and conformance aspects that both leads to the quality outcomes. So that's what why the why? I believe that the quality assessment manual is not just the manual for quality assessments, but it's also a guidance document for internal audit functions to enhance.
00:22:21
And elevate their internal auditor.
00:22:23
00:22:35
Self-assessment with independent validation.
00:22:38
Does the quality assessment manual provide some guidance for that kind of assessment and does it talk about what the the the relative benefits or a full external quality assessment are versus the say?
00:22:52
Yeah, I I think we well as I said, uh, and both Emmanuel without trying to be a I would say an an audit handbook I think is is well, good synopsis at least for you know what you can do as a as an audit function. And so I think we we describe very well the benefits you know of either going for.
00:23:13
Full assessment with external validation or self-assessment. So I think upon reading of the manual you should be able to to make how to make the assessment for the best store for your organization in my opinion.
00:23:26
Yes. Then can I answer that as well, just briefly that it identifies the differences between the two and the pros and the cons of both approaches to to an assessment. And in addition to that, it also talks about peer reviews and and what would constitute a peer review assessment as well. And I wanted to add that it not only talks about the external.
00:23:48
With the assessments, which is the self-assessment of independent validation or the full external quality assessment, but it also gives guidance on the internal quality assessments and what needs to happen in terms of your internal quality assessments that would eventually ultimately.
00:24:03
Read up to your external quality assessments and and the outcomes of those.
00:24:09
Thanks David.
00:24:10
Yeah, sure. In your professional practice.
00:24:14
What are you hearing from chief art executives or, you know, boards that engage you for external quality assessments? What are you hearing from them as to what they want out of?
00:24:25
The the quality.
00:24:26
Assessment, right? What are they primarily looking for?
00:24:28
Out of these ways.
00:24:31
I would say from my perspective, I think about they definitely want to know well, you know where they are. And I think with the the new standards, but yeah, they're now out for for about a year. I think they definitely want to see what are what are the gaps we need to to fill in order to be in line with the new standards.
00:24:48
So.
00:24:48
I think that's those are in my opinion.
00:24:51
Of the two more most predominant questions.
00:24:56
Martin, is that? Is that what you're hearing also?
00:24:59
Well, yes, in addition to to those comments, I also when I when I talk to to boards or committees regarding quality assessment and this year is most of the time, they don't just want a pure assessment on conformance to the standards, they're actually looking for additional things like.
00:25:19
Practices and recommendations for improvements and I was.
00:25:22
Busy with some training today on on new standards where the one lady actually asked what what is that full conformance mean? Does that mean that that you're at the top of your game and nothing can be improved and like my response to that was there's always room for improvement, it doesn't matter where you are, there's always room for improvement. So I would expect even when we do it normal.
00:25:43
Makes no quality assessment and there's a full achievement of everything that the external quality assessment is at such a stage that they can still make recommendations that would lead to improvements on things in order.
00:25:54
Function where there would be for effectiveness or efficiency purposes, and I think that's what boards audit committees and chief audit executives are looking for is those value added opportunities even from external quality assess.
00:26:07
And and do do both of you think that the the quality assessment manual is a a useful and you know is fit for purpose for for those for what the boards and the chief art executives are looking for. For another way. Do you do you think that the additional tools or resources would be helpful?
00:26:27
To provide the complete picture of.
00:26:29
Quality and Martin talked earlier about additional.
00:26:32
Maturity assessment guidance.
00:26:35
I would actually I would actually.
00:26:38
Say that the.
00:26:39
QM manual is it's not the be all and the end or of of quality in the internal audit function, but it's a definite fantastic starting point. It doesn't just give you the basics, it goes a little bit above and beyond those basics. Obviously it doesn't give you the details of maturity and.
00:26:57
Are to determine the different levels of maturity and just give you some insights into those maturities. But it gives you.
00:27:05
Enough information where you can satisfy yourself as an internal order function. If you use that manual that we are definitely either on the right path or we where we need to be. Yeah. Thanks. Yeah, if.
00:27:18
You're talking to a new chief audit executive and you know, maybe starting up, you know, a new internal audit function hasn't gone through an external.
00:27:26
Assessment before can they use this manual as a guide to establishing processes and a methodology for internal quality assessments that will prepare them for, you know, full external assessed?
00:27:42
I would say in my opinion, yes, that's the the short answer and and again I think a little bit to add on on on what the OR what Martin said just a minute ago. I think the the manual is kind of guideline and is going to give you the basics. But I think the chief of the executive will kind of have to think out the box and see OK where are we?
00:28:02
What's our maturity? And then say, OK, how can we now benefit from a good running audit functional? So I think yeah, even new new commerce or people that are going to do an assessment for the first time, I think the new audit manual is definitely going to be a good.
00:28:22
So looking forward a couple of years, what do you think some of the most impactful innovations would be, you know, in the area of quality assessment you would, you know, incorporating new technology incorporating, you know, a broader, you know, framework?
00:28:42
Of maturity. Where, where, where do you think quality assessments will will be going?
00:28:46
In the future.
00:28:47
I'll take that one from now. Embracing technologies is one of the key topics that is being discussed across this profession. You'll see in the Vision 2035 reports as well that embracing your technology and and the more you go around attending conferences and listening to people speaking is obviously at the.
00:29:07
The tip of the tongue of everyone.
00:29:09
And and those emerging technologies and the use of them in in external quality assessments cannot be denied. Somewhere along the line, those technologies would have to start playing a role in the the quality assessment manual. So I don't think this quality assessment manual is going to be the same manual for the next 10 years. I think it's going to be evolving, has been moved along in terms of maturity.
00:29:30
Assessments. I'm sure that's one aspect that's also gonna.
00:29:33
Be evolved within the QM manual and it's going to grow and develop as the time goes by. But in addition to that, there's not only the quality assessment manual. I mean the the Institute is developing so many tools and guidance documents for internal functions that need to be used supplementary to the QM manual. If I can put it that way to develop your internal.
00:29:53
It's all not supplementary maybe, but even prior to QA's, in order to make sure that your your internal order function is on the right way to not only conformed, but to achieve the purpose, attendance and auditing. And that's obviously to help an organization great protect and sustain value.
00:30:10
You're kind of stealing my Thunder, David, because I was going to say the tools, it's definitely, you know, an element in the the execution of the assessments, slash self-assessment. But I think it's also a good moment to think about the purpose of the function. Why do we have one? What do you, what do we want to achieve? How can we utilize it just there, you know purpose. It's also in the whole.
00:30:31
Sustainability discussion it's also kind of a key vert or a key concept or key point of the discussion, so I.
00:30:38
Doing an assessment might help you kind of focus again or or ask yourself the question, but yeah, what's the purpose of our audit function and are we on the right track or are we getting the benefit out of it?
00:30:54
Along those lines, let me ask what would be your best you know, response to something? Why? Why should I get an external quality assessment?
00:31:02
I feel like I've got a mature internal audit function and we have good practices and we're able to verify our conformance against the standards. You know, why isn't that an?
00:31:13
I think it's like with every time you go for outside advice, I mean it's an opportunity to have another viewer. Things have a fresh look at at the situation. And yeah, look at your environment with a set of fresh eyes. So I I think there's definitely an added value element to it.
00:31:31
Absolutely. I would emphasize that added value because a lot of the times it's an ordered functions they tend even if they are good and they're running well and they're performing.
00:31:41
Everything according to plan. There is a point in time where they start wearing blinkers and only focus on the things within their organization, not looking and seeing the bigger picture of what's happening in the industry or the profession and start forgetting or they tend to start forgetting that there's a bigger world out there.
00:32:01
So a lot of the times that if I can give advice to into all the functions, go and get those external quality assessments because it brings a different point of view into your internal function.
00:32:14
On dirt, do you have any final thoughts or suggestions that you would want to put out there for internal auditors and you as it relates to quality assessments?
00:32:23
Or the new QAM.
00:32:25
Again, I I think the the good thing is for we we revamped the the new quality manual. I think we we gave good guidance on what to look for, how to assess.
00:32:36
And we didn't have picked the books. The yeah. Checklist, I would say. So for me, it's a win, win. Win. So yeah, I can only recommend everybody to have a good look at it. Use it wisely. And yeah, make progress.
00:32:51
Do you have any final thoughts or words of wisdom for the internal audit community?
00:32:56
From my side, yeah, the the new QA manual is is not just a checklist approach like they've mentioned, it's it's a document that or manual that can be used by internal functions to help them develop.
00:33:12
Growth and it's not the be all and end all of of what an internal function is is a bug, but it does give CE some insight as to what the things are that external quality assessors are going to focus on. What are they going to approach the different aspects of your QA.
00:33:32
So just in terms of that, it would might change minds of some CAE as to how they approach certain aspect of their processes.
00:33:44
All.
00:33:44
Now that we're in the appendix portion of the recording, let me ask about topical requirements.
00:33:55
I don't hear you, David. Sorry.
00:33:59
Yeah. So I I, I I didn't want to ask about the topical requirements directly or you know in in the the full screen. But did either of you, you know want to?
00:34:09
Take a stab at the.
00:34:11
Talking about how the quality assessment manual incorporates the topic of requirements into the assessment.
00:34:18
OK.
00:34:19
I will be glad to take that one, David, because the topical requirements is actually an add on to the main 5. So it's it's not that there's going to be any difference in how you approach an audit or plan for an audit or execute or communicate through the the engagement itself and the topical requirements.
00:34:40
Just additional I nearly said guidelines, but it's not guidelines it's it's the scope, either it's not a scoping document either, but it gives the internal order functions some insights as to what they must be focusing on when they look at those topics, when and if they are auditing those topics. Now from an external.
00:35:00
Quality assessment perspective or national quality assessment perspective.
00:35:06
The only time that those topical requirements are going to be reviewed is if they were performed. If they were part of your plans initially. Secondly, it's it. It forms part of the same selection process as any other order would form part of. So if you've performed 100 reviews during the course of the past year and the sample selection is 10, there's going to be a random selection.
00:35:28
The topic requirements of one of those selections then, that standard that was created for that topic will be used by the QA assess.
00:35:36
So.
00:35:36
To evaluate that process and how you approach that process for that topical requirement. In addition to that, I've spoken to a number of people already about topical requirements during training sessions and and and E QA, and I must say there there isn't a lot of pushback at this stage, not in the South African context in terms of topical requirements, it's actually.
00:35:57
Being embraced and the a lot of the feedback is we're looking forward to those requirements so that we at least know what the minimum things are that we need to focus on when we when we approach those topics.
00:36:08
One last question about the assessment manuals methodology for concluding on domain one and it's fulfilling the purpose of internal audit.
00:36:19
I would say well, the objective is that you, yeah, you have your conclusions on all the domains, but at the end, you're gonna have to make a yeah, final conclusion on on the on domain one. Sorry at the the the the purpose of your audit function and and yeah. So I I think.
00:36:37
Where the standard starts with domain one. I think here from a quality assessment you're going to have to do your work and then come to a conclusion well after you've done your assessment. Where do we fulfill with domain one with the and the purpose of your your audit function?
00:36:53
And Martin, do you an opinion on why the conclusion model was structured that way?
00:36:58
Again, I think we had a lot of discussions on this one, but it is the ultimate outcome of what a needs an order function needs to achieve. That's the that's our ultimate goal. And even if you are achieving say, 70% of the principals within the.
00:37:19
The the standards.
00:37:20
And.
00:37:21
Well, 70% of the principles and the standards, which would probably put you somewhere depending on which ones that are generally achieved rating, they can still be a general achievement of the purpose of internal auditing where you are strength and organizations, ability to create protected stand value. So although it's not.
00:37:42
Completely separate. It is informed by everything else that we do. It's got such an impact on the Internet or the profession that it needs to be emphasized, but it's it. It's being emphasized by putting it separately. Let's put it that way. That's my point of view.
00:38:00
That one.
00:38:01
Well, thank you, Martin, and thank you, Dirk for taking the time to talk to us about the quality assessment manual and and thank you both for your efforts in developing the new manual. I know I appreciate it and the I thanks both of you.
00:38:14
Yeah. Hey, David.
00:38:14
And thank you very much for having us.
00:38:17
Yeah, happy to share the experience.
00:38:20
In bonus content, the IRA's Deborah Palian joins Robert Perez to discuss the 2024 N American Pulse of Internal Audit report.
00:38:31
Thanks so much for joining me.
00:38:33
It's a pleasure to be here.
00:38:35
So again, the goal for both the post and risk and focus surveys and reports is to share that useful data and benchmarking for internal auditors and CAES. So what's your approach when you're crafting the questions for those surveys that help accomplish that goal? So let's.
00:38:54
Well definitely for the pulse, you know that has a long legacy and the real focus is for an internal audit leader, CAE.
00:39:02
Or director level.
00:39:04
To have information they can use to make their audit plans. So we're always thinking about what the practitioner needs. You know, the metrics that they're already using.
00:39:13
The modify it and change it every year to make it better and to serve our practitioners.
00:39:21
So as I mentioned before this it's in its 16th year. So what kind of benefits do we gain from having sort of a more than a decade's worth of data well over decades worth of data for some of the of the points that, that, that we come up with?
00:39:35
Well, I think when it really became very relevant was in the.
00:39:42
Because we had asked for years 2 very basic questions we said, did your budget increase, decrease or stay the same? Did your staffing increase, decrease or stay the same? So when the pandemic hit and everyone's budgets went down and they stopped increasing their staff, we could look back at the 2008.
00:40:02
World Economic crisis and compare that to the pandemic and have a a sense of what might happen in the future which really did play out about the same way. It was really interesting.
00:40:14
And some of the the charts that we refer to in House as sort of.
00:40:17
Which charts it really shows how parallel those two events were in terms of both the drop and the rebound correct.
00:40:26
That is correct. That is correct.
00:40:29
So with risk and focus, we made a decision to take what was a regional product of the European Confederation of Institutes of Internal Auditors ECIA and turn it into a global product. First, tell me how you approach such a massive reset.
00:40:45
First you build relationships with the leaders in those regions. So we had a point of contact within each region that helped us also reach out to the institutes of that region. So we had really broad participation and we were making sure that we were telling the story from that region's.
00:41:04
Point of view, not from our point of view.
00:41:06
We were also able to package the data that came from the risk and Focus survey in a couple of novel ways. Tell me a little bit about hot topics and board.
00:41:15
Briefings.
00:41:16
So it's for two different audiences. So the hot topics are hot topics for internal auditors and it actually focuses beyond the survey to talk about leading practices.
00:41:27
To respond to the risks and the audit plan challenges that were raised through the survey. So that's the hot topics. The board briefing is a summarized version that focuses on how boards can support internal audit in addressing these.
00:41:44
Yes.
00:41:45
And the beauty of both of those products is that you created those for the specific.
00:41:49
Regions around the world.
00:41:50
Correct, yes, there every report is completely different. It has a different subject matter, experts and different topics because each region is different.
00:42:01
To that point, was there anything, any unique challenges or maybe insights that came out of those individual?
00:42:07
Reports. Well, I think it was. It was really interesting.
00:42:11
The similarities that we did not expect and then the difference is that that showed that each region is unique. So that's what surprised me very much. In fact, I'm going to reference one of my favorite graphs that reminds me that really the top 3 or 4 risks are the same worldwide, but each region had.
00:42:31
Its unique differences. For example, in Europe and in Latin America, geopolitical uncertainty was was a prime concern. We're going to see that change and expand this year because things have changed even in the course of 12 months.
00:42:47
Additional thoughts you want to share?
00:42:49
I think you know the CIA really is the only organization that has the ability to reach internal auditors all around the world. And it's not just in the big companies. It's it's not just in the big countries we actually.
00:43:07
Touch and interact with internal auditors everywhere. I'm I'm always amazed at the number of countries that participate in our global surveys. It's over one.
00:43:17
Period. Every time easily and maybe 8 or 10 people from that location, but it all adds up to a very global picture of the profession.
00:43:28
And to your earlier point, there's a lot more similarities among those 200 and those risks and risk management.
00:43:37
Than we might expect.
00:43:39
Yes, that's very true.
00:43:40
So any other thoughts you'd like to share at this point there?
00:43:43
Well, you know, if you have not already downloaded some of our reports, many of which are available to the public, I really encourage people to do that. Our posted internal audit report is available to the public. All the risk and focus reports are available to the public from every region. So if you're a multinational organization.
00:44:04
And you work with Asia Pacific or Latin America or or North America, you can download the reports that are relevant to that region.
00:44:14
Thank you again so much David, for joining us today. It's always great to chat with you.
00:44:18
Thank you very much, Robert.
00:44:20
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