1.2 INTERNAL AUDIT ADMINISTRATIVE ACTIVITIES
1. Overview
a. The chief audit executive (CAE) is responsible for management of internal audit activity resources in a manner that ensure fulfillment of its responsibilities. Like any well-managed department, the internal audit activity should operate effectively a efficiently. This can be accomplished through proper planning, which includes budgeting and human resources management
b. Management overseas the day-to-day operations of the internal audit activity, including the following administrative activities;
1) Budgeting and management accounting
2) Human resource administration, including personnel evaluations and compensation
3) Internal communications and information flows
4) Administration of the internal audit activity's policies and procedures
Performance Standard 2040 : Policies and Procedures
The chief audit executive must establish policies and procedures to guide the internal audit activity.
2. Degree of Formalization
a. According to Practice Advisory 2040-1, Policies and Procedures, policies and procedures developed by the CAE do not necessarily need to be contained in formal administrative and technical manuals.
1) A small internal audit activity may be managed informally through daily, close supervision and memoranda.
2) In a large internal audit activity, more formal an comprehensive policies and procedures are essential to guide the execution of the internal audit plan.
b. The importance of the relationship of the particular internal audit activity to the extent of its formal policies and procedures is made clear in this Interpretation :
Interpretation of Standard 2040 :
The form and content of policies and procedures are dependent upon the size and structure of the internal audit activity and the complexity of its work,
3. Budgeting
a. The CAE is responsible for creating the operating and financial budget. General, the CAE audit managers, and the internal audit activity work together to develop the budget annually. The budget is then submitted to management and the board for review and approval.
4. Human Resources
a. The skill set and knowledge of the internal audit activity are essential to its ability to help the organization achieve its objectives. According to Internal Auditing: Assurance & Consulting service (Redding, et al), "The CAE is responsible for hiring associates to fill the organizational structure of the internal audit function in a way that maximizes efficiency, effectively provides the necessary skill base, and makes good use of the financial budget.”
b. Internal auditors should be qualified and competent. Because the selection of a superior staff is dependent on the ability to evaluate applicants, selection criteria must be well-developed
1) Appropriate questions and forms should be prepared in advance to evaluate, among other things, the applicant's (a) technical qualifications, (b) educational background, (c) personal appearance, (d) ability to communicate, (e) maturity, (f) persuasiveness, (g) self-confidence, (h) intelligence, (i) motivation, and (j) potential to contribute to the organization.
c. Internal auditors need a diverse set of skills to perform their jobs effectively. These skills are not always apparent in a standard resume. Developing effective interviewing techniques will ensure that the internal audit function acquires the proper set of skills, capabilities, and technical knowledge need to accomplish its goals.
d. Effective interviewing techniques involve structured interviews and behavioral interviewing.
1) Structured interviews are designed eliminate individual bias. These interviews use a set of job-related with standardized answers, which then are scored by a committee of three to six members. According to Management (Kreitner & Cassidy, 12th edition), interviewers can use four general type questions:
a) Situational – “What would you do if you saw two people arguing loudly in the work area?”
b) Job knowledge – “Do you know how to do an Internet search?”
c) Job sample simulation – “Can you show us how to compose and send e-mail message?”
d) Worker requirements – “Are you able to spend 25 percent of your time c the road?”
2) Behavioral interviews determine how candidates handled past situations. Past performance is generally indicative of future performance.
Stop and review! You have completed the outline for this subunit. Study multiple-choice questions 3 through 8 beginning on page 31