EXPERT OPINION internal regulatory documents , evaluation of the internal audit ' s contribution to the activities within the organisation , as well as the analysis of key performance indicators . The main objective of periodic self-assessment is the preparation of recommendations , which are aimed at the improvement of the internal audit activity . The periodic self-assessment , which is carried out shortly before the external evaluation , can facilitate successful external evaluation , and reduce its cost . When the external assessment is performed in the form of Self-assessment with independent external validation , the periodic internal assessment can be used as a part of this process . While performing the self-assessment , we recommend using the Implementation guides called ‘ Consideration for Demonstrating Conformance ’.
How should the external quality assessment be performed ?
In addition to the self-assessment the Standards require mandatory external quality evaluation to be performed on a regular basis . Although the Standard 1312 states that the external assessment must be completed not less than once every five years , some companies , which adhere to the best practices , conduct it more frequently . For example , 17 percent of companies included in the Global audit information network questionnaire for 2016 undergo an independent external quality assessment once every three-four years .
External quality assessment may be conducted in two forms : full external evaluation and self-assessment with independent external validation . The second option is more suitable for the internal audit functions , which are limited in financial resources and / or for those , whose activity is regulated by other legislations ( i . e . apart from the Standards ). However , it is worth noting that Self-assessment with independent external validation is limited in its scope and sometimes it does not include benchmarking against the best practice standards . Independent external assessment may include the following components : ( a ) strategic assessment of alignment with stakeholder expectations ; ( b ) benchmarking against the international best practices ; ( c ) maturity level assessment ; ( d ) comparative analysis ( benchmarking ) of internal audit function with the data from Global audit Information Network questionnaires ; and ( d ) comparison with internal audit functions across industry .
What reporting on the Quality assurance and improvement program should be produced ?
The key success factor in the implementation and application of the QAIP is the preparation of the regular and high quality reporting and its timely analysis . Examples of such documents include the external assessment report , the results of ongoing monitoring and periodic self-evaluation , and report on the results of QAIP implementation . The CAE is responsible for development of the necessary reporting templates . Moreover , the CAE must present the reports on QAIP to the Audit Committee and / or Board of Directors .
What changes have been implemented in the latest edition of the Standards ?
As mentioned earlier , the latest edition of the Standards came into effect on January 1 , 2017 . These changes affected the QAIP as well and include the following :
1 . CAE should encourage Board oversight in the external assessment to reduce perceived or potential conflicts of interest .
2 . The clause on assessment of compliance with the Definition of Internal Auditing was excluded from QAIP .
3 . The Standard 1312 specifies that the external assessment may also include operational or strategic comments .
4 . The reporting on QAIP should include :
* The scope and frequency of both the internal and external assessments .
* The qualifications and independence of the assessor ( s ) or assessment team , including potential conflicts of interest .
* Conclusions of assessors .
* Corrective action plans .
In conclusion , it should be noted that the conformance with the QAIP provides a reasonable assurance for stakeholders about the effectiveness of the internal audit function and the value it brings to the organisation as a whole .
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