The Global IIA

1
The Global IIA
A Vision for the Profession

• Gerry Cox, MIIA, CIA
• Chairman of the Board

2
The Key Initiatives Challenges

• International Professional Practices Framework
• Common Body of Knowledge
• IIA Strategic Plan

3
Vision for the Future- The New IPPF
4
Why Did We Update the PPF?

• Professional Practices Framework (PPF) concept is
  still viable, but new elements of guidance are
  being issued that did not exist at time of the
  current framework, e.g.,
• Position Papers
• Global Technology Audit Guides
• Guidance development and approval processes not
  transparent nor consistent.
• Inclusion of affiliate guidance within PPF not
  defined.

5
What Were We Trying To Achieve?

• To assess the effectiveness of The IIAs
  professional guidance structure and recommend
  improvements.
• To establish formal processes for the
  development, review, approval, and issuance of
  the various types of guidance. To communicate
  such processes to members and stakeholders.
• To define education, oversight and monitoring
  processes to facilitate ongoing development of
  guidance, consistent with the PPF.
• So that

The PPF structure and associated processes
ensure that authoritative guidance is current,
relevant, timely and internally consistent.
6
IPPF Exposure Statistics

• Exposed January 26, 2007 for 90-day period,
  ending on April 20, 2007.
• Almost 17,000 downloads.
• 421 responses, inclusive of individuals and
  affiliates or organizations.
• Responses from 48 countries.
• Received feedback from major affiliates, key
  stakeholders (IFAC, GAO, ACCA, ALGA), and
  numerous members.

7
IPPF Exposure Feedback

• Feedback very positive, with a supportive
  response rate greater than 85 for all but four
  proposed changes
• The inclusion of the Quality Assurance
  Improvement Guidance as a new separate element of
  the Framework
• Redefining implementation standards to only
  encompass assurance and consulting standards
• Having varied voting requirements to approve new
  guidance, determined by the approval body
• The recommended review cycles for maintaining the
  guidance elements
• Recommended response described on next page.

8
IPPF Exposure Response
Task Force Response Rationale
Eliminate QA guidance as separate element. Guidance maps within Practice Guide element of Framework.
Retain original proposal to limit Implementation Standards to assurance and consulting. Responses reinforced preference for principles-based, not engagement specific standards, which can be addressed in guidance.
Defined consistent voting requirements for guidance approval -- 2/3 of the members of the relevant Committee or Board. Given importance of global representation and support for new guidance, simple majority not sufficient.
Retained and clarified three year minimum review cycle which could be simply to confirm (but not change) guidance. Existing language contained ambiguity which was clarified.
9
New IPPF
Definition Statement of fundamental purpose, nature, and scope of internal auditing.
Code of Ethics Statement of principles and expectations governing behavior of individuals and organizations in the conduct of internal auditing. Description of minimum requirements for conduct. Describes behavioral expectations rather than specific activities.
International Standards Mandatory requirements consisting of Statements of basic requirements for professional practice of internal auditing and for evaluating effectiveness of its performance, which are internationally applicable at organizational and individual levels. Principle focused and provide framework for performing and promoting internal auditing. Includes Attribute, Performance and Implementation Standards. Interpretations which clarify terms or concepts within the Statements. Consider both Statements and Interpretations to understand and apply correctly.
Position Papers IIA statement to assist a wide range of interested parties, including those not in internal auditing profession, in understanding significant governance, risk or control issues and delineating related roles and responsibilities of internal audit.
Practice Advisories Address approach, methodology and considerations, but not detailed processes and procedures. Concise and timely guidance to assist internal auditors in applying Code of Ethics and Standards and promoting good practices. Includes practices relating to international, country, or industry specific issues specific types of engagements and legal or regulatory issues.
Practice Guides Detailed guidance for conducting internal audit activities. Includes detailed processes and procedures, such as tools and techniques, programs, and step-by-step approaches, including examples of deliverables.
10
When Will the New IPPF be Completed?

• Fully revised IPPF completed January 2009, and
  available in core languages of English, Spanish
  and French.
• July 2007 January 2009
• revise Standards (add Interpretations) and
  re-expose
• modify Practice Advisories to meet new
  description
• review IPPF referencing system to include
  Position Papers and Practice Guides
• Professional Practices Council will monitor
  implementation plan and timeline.

11
Next Steps

• Obtain Board approval of IPPF.
• Complete the Implementation Plan.
• Develop communications strategy
• Assign project manager
• Finalize project plan
• Define and Implement Education and Maintenance
  Processes.
• Committee members
• External stakeholders
• Members and affiliates

12
Common Body of Knowledge 2006
13
CBOK and The Internal Auditing Profession

• CBOK will help us
• More clearly understand how internal auditing is
  being practiced around the world
• Help us update our professional Standards
• Allow us to look closely at the framework of the
  profession

14
Previous Studies
Study Name Year Participation Responses Languages
Common Body of Professional Knowledge 1972 United States 75 1
Common Body of Knowledge 1985 United States and Canada 340 1
Common Body of Knowledge 1992 United States and Canada 1247 1
Competency Framework for Internal Auditing 1996 21 Affiliates 136 1
Common Body of Knowledge 2006 89 Affiliates 145 Chapters 9,366 17
15
Summary Demographics
Participants Participants
CAE or equivalent 26.5
Audit Managers 22.8
Audit Seniors/Supervisors 25.2
Audit Staff 18.2
Others 7.3
16
The Standards
Comparison of Adequacy of Guidance Provided by The Standards and Compliance with The Standards for All Respondents (Percentages) Comparison of Adequacy of Guidance Provided by The Standards and Compliance with The Standards for All Respondents (Percentages) Comparison of Adequacy of Guidance Provided by The Standards and Compliance with The Standards for All Respondents (Percentages)
Standard Perception of Adequacy of The Standards Full Compliance
1000- Purpose Auth 86.2 63.0
1100- Ind Obj 88.1 66.9
1200- Due care 87.0 62.9
1300- QAIP 77.3 40.0
2000- Manage IAA 83.7 57.6
2100- Nature of work 82.2 57.5
2200- Engagement Plan 83.6 57.7
2300-Engagement 83.8 59.7
2400- Comm Results 85.2 64.1
2500- Monitoring 81.8 52.6
2600- Resolution Risks 76.0 46.9

17
The Standards

• Common Reasons for Not Adhering to The Standards
• Inadequate Internal Audit Activity (IAA) staff
• Management does not believe it adds value
• Compliance is too time consuming
• Compliance not supported by management
• Superseded by local/government regulations or
  standards

18
Emerging Roles of the IAA

• The External Environment Differs Globally
• 61 of IAAs are in countries with laws mandating
  an IAA and 13 anticipate such laws within the
  next 3 years
• 68 of IAAs organizations have corporate
  governance codes and 23 anticipate them in 3
  years
• 71 of IAAs organizations have internal control
  frameworks and 24 anticipate them in the next 3
  years

19
Action Items for Profession

• Increased compliance with The Standards
• Expansion of university level courses in internal
  auditing
• Education of post university level employees
  about internal auditing
• Increased certification of staff
• Increased professional development of staff
• Proactive discussions about the value of internal
  auditing as a profession and an activity

20
CBOK Project Deliverables

• A Global Summary of the Common Body of Knowledge
  2006
• The Preview Edition is for sale now
• Anyone who buys the Preview Edition will also
  receive the complete book when it is released in
  October 2007
• We anticipate that translation of the complete
  book into Spanish and French will commence in
  September 2007

21
IIA Strategic Plan Planning Ahead for the IIA
and the Profession
22
Where Are We Today?

• In third year of current 3 year plan
• Some objectives will be carried over

23
2005-07 Strategic Objectives

• Advocacy
• To be recognized as the global voice for the
  internal audit profession.
• Globalization
• To develop and sustain the internal audit
  profession globally through appropriate
  infrastructure, coordination, support and
  communication.
• Service
• To provide exceptional service to IIA members.

24
Emerging Themes for New Strategy

• Elevate and advocate the profession
• Operate as a global organization
• External recognition as the voice of the
  profession who sets the standards
• Preferred and primary provider of research for
  and services to the profession

25
Preferred Future Milestones
By 2013

• Internal Auditing is universally recognized as a
  profession
• To Accomplish this The IIA
• Defines the principles of the profession and
  assures that the principles are available
  seamlessly worldwide
• Assures adherence to professional requirements
• Is the preferred provider in the research,
  development and dissemination of knowledge to
  advance the profession
• Is seen by its members and operates as one global
  organization

26
Strategy The Main Recommendations

• Develop enhancement to the professional
  designation that builds upon CIA
• Develop CIA, with additional specific knowledge,
  experience and educational requirements
• Develop competency and maturity models, and align
  training strategy and core curriculum to models
• Develop membership strategy aligned with new
  professional designation
• Introduce new full vs. associate member
  categories, and phase in membership requirements
  over extended time period with selected
  grandfathering of existing members
• Develop membership retention and membership
  recruitment strategies, including
  underrepresented specialist groups

27
Strategy The Main Recommendations

• Develop multi-faceted assessment processes and
  phase in over extended time period
• Self-assessment tools against competency and
  maturity models
• Self assessment tools for professional
  designation
• Self-reporting mechanisms for members on base
  membership requirements, and for CIAs on expanded
  requirements
• Selected independent validation processes for
  those with professional designation
• Develop structured global research methodology
  and guidelines
• Develop recommended training curriculums, and
  leverage other training providers, as appropriate

28
Strategy The Main Recommendations

• Leverage global Knowledge Management (KM) study
  to implement KM system and process, including
  virtual portal to provide information, products
  and services in local markets
• Develop global footprint by strategically
  determining most important expansion areas for
  the IIA and the profession
• Develop service models for serving affiliates at
  differing maturity levels, leveraging IIA
  headquarters and mature affiliates as well as
  regional offices
• Upon completion of NAB study on feasibility of NA
  Affiliate, reassess global governance structure
  and funding model
• Expand advocacy strategy to encompass member and
  nonmember practicing internal auditors

29
Milestones, Outcomes Strategies
1. Internal Auditing is universally recognized as
a profession
High preponderance of practitioners are certified
and meet professional requirements Value of
internal auditing recognized by stakeholders

• Clearly define value proposition evaluate
  implications of internal audit opinion on
  internal controls
• Develop requirements for the CIA that exceed
  current level
• Develop phased membership transition strategy for
  associate vs. full members, and develop
  membership growth and retention strategy
• Continue advocacy efforts and include practicing
  internal auditors
• Continue IAEP educational strategy

30
Milestones, Outcomes Strategies
2. Defines the principles of the profession and
assures that the principles are available
seamlessly worldwide
Global current PPF Global communications
mechanism to consistently, effectively and
efficiently deliver PPF to all members and
practitioners

• Implement IPPF with routine evaluation of
  standards and guidance vs. professional needs
  develop individual vs. company level standards
• Execute the Translation Strategy including a
  routine re-evaluation of core languages develop
  a cooperative translation process for non-core
• Develop proactive communication strategy to
  educate members, nonmembers and stakeholders on
  principles of profession

31
Milestones, Outcomes Strategies
3. Assures adherence to professional requirements
Professional requirements for individuals and,
separately, for organizations An independent
monitoring and validation process to assess
adherence by those internal auditors with the
professional designation

• Communicate requirements for new professional
  designation and develop supporting educational
  programs
• Develop self-assessment frameworks for members
  with and without professional designations
• Develop disciplinary policy for noncompliance
• Develop selected independent validation process
  for those with professional designation

32
Milestones, Outcomes Strategies
4. Is the preferred provider in research,
development and dissemination of knowledge to
advance the profession
Effective global knowledge management of IA
theory, guidance, best practices, tools and
techniques through global organization, provides
real-time information on emerging issues and
their implications

• Develop structured global research methodology,
  guidance and prioritization process
• Leverage Knowledge Management study to develop KM
  system and process, including virtual portal
  for sharing information, products and services
• Develop competency and maturity models, with
  customizable training plans
• Develop global framework and standards for
  training/services develop recommended
  curriculums and leverage other training
  providers, as appropriate

33
Milestones, Outcomes Strategies
5. Is seen by its members and operates as one
global organization
A global structure/economic model in place to
sustain the IIA globally Respective roles,
responsibilities, accountabilities of each
element are accepted and enforced Products and
services are conceived, developed, distributed
globally

• Develop robust global marketing and branding
  strategy
• Develop global expansion strategy (footprint)
  for affiliate expansion or consolidation
• Develop service models for affiliates at varying
  maturities leverage IIA headquarters and mature
  affiliates as well as regional offices
• Upon completion of NA Affiliate study, reassess
  global governance structure and funding model
• Develop global membership policy, defining
  principles for all affiliates and the monitoring
  process

34
Timeline and Status
Activities Timing Status
Draft preferred future state and develop key outcomes March April 2007 Complete
Develop discussion materials for broader exposure and input April 2007 Complete
Solicit broad input, including Global Council April July 2007 Complete
Global Board Update July 14, 2007 Complete
Refine, map to current strategic plan, identify high level implementation activities July August 2007 Complete
Solicit broad input September 2007 In Progress
Refine, discuss with Executive Committee October 2007 Complete
Refine, discuss with Global Board November 2007 Not Started
Refine, approval by Global Board December2007 Not Started
Develop action steps to implement strategy, including milestones December 2007 March 2008 Not Started
Assign responsibilities for implementation March July 2008 Not Started