The Essential Handbook of Internal Auditing

by K. H. Spencer Pickett ( )

• ISBN13: 9780470013168
• ISBN10: 0470013168
• Format: Paperback
• Copyright: 2005-06-01
• Publisher: WILEY

Summary

The Essential Handbook of Internal Auditing is a condensed version of the second edition of the highly successful "Internal Auditing Handbook". It shows the reader how to understand the audit context and how this context fits into the wider corporate agenda. The new context is set firmly within the corporate governance, risk management and internal control arena.In addition to the author's own views of the auditor's role, the reader is provided with a range of professional standards and guidance that provides a valuable source of various key issues and developments.K H Spencer Pickett has also developed many helpful models and checklists that provide a short cut to understanding the work and coverage of internal auditing.

Author Biography

K.H. Spencer Pickett is a course director at CPMS, in Ascot, Berkshire, where he is responsible for training programmes on internal audit, corporate governance and risk management. Spencer is a member of the Chartered Association of Certified Accountants, Institute of Internal Auditors, Certified Fraud Examiners and Chartered Institute of Personnel and Development.

Table of Contents

List of abbreviations	xi
1 Introduction	1	(10)
Introduction	1	(1)
1.1 Reasoning behind the Book	1	(1)
1.2 The IIA Standards and Links to the Book	1	(1)
1.3 How to Navigate around the Book	2	(1)
1.4 The Handbook as a Development Tool	3	(1)
1.5 The Development of Internal Auditing	3	(5)
Summary and Conclusions	8	(1)
Chapter 1: Multi-Choice Questions	8	(1)
References	9	(2)
2 Corporate Governance Perspectives	11	(42)
Introduction	11	(1)
2.1 The Agency Concept	11	(3)
2.2 Corporate Ethics and Accountability	14	(3)
2.3 International Scandals and their Impact	17	(4)
2.4 Models of Corporate Governance	21	(6)
2.5 Putting Governance into Practice	27	(2)
2.6 The External Audit	29	(8)
2.7 The Audit Committee	37	(4)
2.8 Internal Audit	41	(2)
2.9 The Link to Risk Management and Internal Control	43	(1)
2.10 Reporting on Internal Controls	44	(3)
Summary and Conclusions	47	(1)
Chapter 2: Multi-Choice Questions	47	(2)
References	49	(4)
3 Managing Risk	53	(32)
Introduction	53	(1)
3.1 What is Risk?	54	(1)
3.2 The Risk Challenge	54	(2)
3.3 Risk Management and Residual Risk	56	(2)
3.4 Mitigation through Controls	58	(2)
3.5 Risk Registers and Appetites	60	(3)
3.6 The Risk Policy	63	(5)
3.7 Enterprise-Wide Risk Management	68	(6)
3.8 Control Self-Assessment	74	(2)
3.9 Embedded Risk Management	76	(1)
3.10 The Internal Audit Role in Risk Management	77	(4)
Summary and Conclusions	81	(1)
Chapter 3: Multi-Choice Questions	81	(2)
References	83	(2)
4 Internal Controls	85	(24)
Introduction	85	(1)
4.1 Why Controls?	85	(4)
4.2 Control Framework-COSO	89	(4)
4.3 Control Framework-CoCo	93	(1)
4.4 Other Control Models	94	(3)
4.5 Links to Risk Management	97	(1)
4.6 Control Mechanisms	97	(3)
4.7 Importance of Procedures	100	(2)
4.8 Integrating Controls	102	(1)
4.9 The Fallacy of Perfection	103	(1)
4.10 Internal Control Awareness Training	103	(2)
Summary and Conclusions	105	(1)
Chapter 4: Multi-Choice Questions	105	(2)
References	107	(2)
5 The Internal Audit Role	109	(24)
Introduction	109	(1)
5.1 Why Auditing?	109	(1)
5.2 Defining Internal Audit	109	(4)
5.3 The Audit Charter	113	(2)
5.4 Audit Services	115	(2)
5.5 Independence	117	(2)
5.6 Audit Ethics	119	(2)
5.7 Police Officer versus Consultant	121	(3)
5.8 Managing Expectations through Web Design	124	(1)
5.9 Audit Competencies	125	(2)
5.10 Training and Development	127	(1)
Summary and Conclusions	128	(1)
Chapter 5: Multi-Choice Questions	128	(3)
Reference	131	(2)
6 Professionalism	133	(22)
Introduction	133	(1)
6.1 Audit Professionalism	133	(1)
6.2 Internal Auditing Standards	134	(9)
6.3 Due Professional Care	143	(1)
6.4 Professional Consulting Services	143	(2)
6.5 The Quality Concept	145	(1)
6.6 Defining the Client	145	(1)
6.7 Internal Review and External Review	146	(2)
6.8 Marketing the Audit Role	148	(2)
6.9 Audit Feedback Questionnaire	150	(1)
6.10 Continuous Improvement	150	(1)
Summary and Conclusions	151	(1)
Chapter 6: Multi-Choice Questions	151	(3)
References	154	(1)
7 The Audit Approach	155	(32)
Introduction	155	(1)
7.1 The Systems Approach	155	(3)
7.2 Control Risk Self-Assessment (CRSA)	158	(4)
7.3 Facilitation Skills	162	(1)
7.4 Integrating Self-Assessment and Audit	162	(1)
7.5 Fraud Investigations	163	(10)
7.6 Information Systems Auditing	173	(4)
7.7 The Consulting Approach	177	(4)
7.8 Compliance	181	(1)
7.9 Value for Money	182	(1)
7.10 The 'Right' Structure	182	(1)
Summary and Conclusions	183	(1)
Chapter 7: Multi-Choice Questions	183	(2)
References	185	(2)
8 Setting an Audit Strategy	187	(24)
Introduction	187	(1)
8.1 Risk-Based Strategic Planning	187	(2)
8.2 Resourcing the Strategy	189	(1)
8.3 Managing Performance	190	(2)
8.4 Dealing with Typical Problems	192	(1)
8.5 The Audit Manual	193	(3)
8.6 Delegating Audit Work	196	(2)
8.7 Audit Information Systems	198	(4)
8.8 Establishing a New Internal Audit Shop	202	(1)
8.9 The Outsourcing Approach	203	(1)
8.10 The Audit Planning Process	204	(4)
Summary and Conclusions	208	(1)
Chapter 8: Multi-Choice Questions	208	(2)
References	210	(1)
9 Audit Field Work	211	(60)
Introduction	211	(1)
9.1 Planning the Audit	211	(7)
9.2 Interviewing Skills	218	(3)
9.3 Ascertaining the System	221	(6)
9.4 Evaluation	227	(8)
9.5 Testing Strategies	235	(5)
9.6 Evidence and Working Papers	240	(1)
9.7 Statistical Sampling	241	(10)
9.8 Reporting Results of the Audit	251	(9)
9.9 Audit Committee Reporting	260	(2)
9.10 A Risk-Based Audit Approach (RaCE)	262	(3)
Summary and Conclusions	265	(1)
Chapter 9: Multi-Choice Questions	265	(5)
References	270	(1)
10 Meeting the challenge	271	(6)
Introduction	271	(1)
10.1 The New Dimensions of Internal Auditing	271	(1)
10.2 Globalization	272	(1)
10.3 The Changing Auditor	272	(1)
10.4 Meeting the Challenge	273	(1)
10.5 Ten Little Maxims	273	(1)
Summary and Conclusions	274	(1)
Chapter 10: Multi-Choice Questions	274	(2)
References	276	(1)
Appendix A Suggested Answers	277	(2)
Appendix B Candidate's Answers	279	(2)
Index	281