Overview of QAR The IIA’s Quality

Assessment Review

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“Good to Great” Organizations have:

Professional & Organizational CredibilityCompliance with Standards brings them VALUE!Continuous Improvement is the path to Long-Term

SustainabilityAudit Committee Oversight is the “Ideas Bench” – Push

beyond expectations (e.g. Sales Growth patterns, Marketing ROI, entry to new markets, product development, etc.)

Why have an External QAR?

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The Top 3 Mistakes of QAR Leading to Compliance Penalties & Fees

What is a Quality Assessment Review According to the IIA?

The Value of a QAR and the Top 3 Revelations You Discover

How to Proceed

Who is Aviva Spectrum

Agenda

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The Quality Assessment Review according to the IIA:

“Chief audit executives must develop and maintain a quality assurance and improvement program that

covers all aspects of the internal audit activity. This must be performed every 5 years.”

This leads us to … Mistake #1.

You may have missed the 5-year deadline. You don’t know when your clock started ticking. You are supposed to start your 5-year deadline the day that your department was begun – the minute you hired the first person in that department.

The #1 Mistake You May be Making

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A QAR reviews the overall effectiveness of an internal audit function by assessing three criteria:

#1. Compliance with professional standards; #2. The effectiveness and efficiency of function activities, organization, resources and skill capabilities; and #3. The evaluation and fulfillment of stakeholder needs.  (Deloitte, Quality assessment review, n.d., http://www.deloitte.com/view/en_BE/be/services/aers/internalaudit/qualityassessmentreview/index.htm)

Let’s back up for a moment…What is a Quality Assessment Review?

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If you do NOT have a QAR1, every document and report that goes out to your board needs to read:

“This report does not abide by the IIA professional standards because we have not gone through a five-year QAR process. We

have not gone through this QAR process….. [Insert Excuse Here].”

 This makes your company’s non-compliance transparent, but it’s also a big red flag

as to the authenticity of your internal systems. Even if your standard operating practices are 100% spot on, having that outside voice concur and provide an overall

approval is vital.

 

Mistake #2

Compliance Made Simple © 1 – IIA Standard 2430 “Engagement Disclosure of Non Compliance with Standards”

For the focus in 2013, “KPMG’s Audit Committee Priorities of 2013” report states a key priority is to “set clear expectations and make sure the internal audit has the resources, skills and expertise to succeed.” A QAR provides the perfect roadmap for both the Chief Audit Executive and the Audit Committee to ensure they are communicating and executing on the organization’s expectations. With a QAR, a report also is drafted by the assessment team, stating the internal audit activity’s conformance or non-conformance with the Standards, as well as any recommendations for improvement opportunities.  (Institute of Internal Auditors, Quality Assessment, https://na.theiia.org/services/quality/pages/quality-assessment.aspx)

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Although internal audit departments have vast and endless responsibilities, seeing the

disclaimer regarding the lack of a timely QAR, a responsible CFO or Audit Committee Chairman may very well demand that the Assessment be

moved on the top of the priority list.  

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Revelation #1.

An external Quality Assessment Review can facilitate the transformation of an internal audit department into a more strategic business partner and value-added activity. A QAR identifies strengths and improvement opportunities that position the internal audit function for ongoing success and greater usefulness to the organization and to key stakeholders.

The external assessment team also identifies opportunities and offers recommendations for improvement, providing counsel to the internal audit staff for improving their performance and promoting the image and credibility of the internal audit function.

 (Institute of Internal Auditors, THE EVOLVING INTERNAL AUDIT LANDSCAPE, https://na.theiia.org/services/quality/Public_Documents/Quality%20Assessment%20Manual%206th%20Ed%20Chapter%201.pdf )

 

The Value of a QAR and the Top 3 Revelations to Watch For

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Revelation #2.

The process identifies opportunities and provides counsel to the chief audit executive and staff for improving their performance and services, as well as promoting the image and credibility of the internal audit activity. By defining where a department stands, the team members can take ownership and feel more empowered in their positions and in their larger role in the corporation.

(Protiviti, Internal Audit Quality Assurance Reviews, http://www.protiviti.com/en-US/Pages/IA-Quality-Assurance.aspx)

The Value of a QAR and the Top 3 Revelations to Watch For

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Revelation #3.

By providing more opportunities for Best Practices and more fulfillment to team members across the board, employees are more fulfilled and turnover is reduced. (And less turnover can equal as much as $4,000 per employee for hiring alone – and up to 200% of an individual’s annual compensation.)

A QAR provides the IA department the highest level of Organization commitment1 which, for accountants, turns into higher job satisfaction.

  

The Value of a QAR and the Top 3 Revelations to Watch For

1 ORGANIZATIONAL AND PROFESSIONAL COMMITMENT AND THEIR EFFECT ON JOB SATISFACTION by Mr. Susanto& Mr. Hastomo April 2012 Journal of Economics, Business and Accountancy

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Visual of QAR and Job Satisfaction

IIA QARTools 3 -

10

IIA QARTools 4 -

15

1) Less turnover2) Higher

productivity

Source: ORGANIZATIONAL AND PROFESSIONAL COMMITMENT AND THEIR EFFECT ON JOB SATISFACTION by Mr. Susanto & Mr. Hastomo April 2012 Journal of Economics, Business and Accountancy

The added fact is that the average CFO or Audit Committee Chairman is not the expert on internal auditing; they rely on each of their internal audit

departments to show them compliance.

Your internal auditors check and report on the quality of controls over your financial reporting, safeguarding of assets, and operational efficiency and effectiveness. 

But who is checking on them?

Mistake #3 of not doing a QAR

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Aviva Spectrum is the premier provider of Internal Audit, SOX compliance, and Risk Management

Services in the West Coast.

Our goal in creating long-term, strategic partnerships with our clients is to establish efficient internal control systems simply and effectively that, in turn, build core

strength and efficiency in your corporate structure.

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Schedule a call with our CEO, Sonia Luna, so we may develop a no-obligation proposal for you. Our proposal turnaround time is approximately 5 – 7 business days after receipt of all necessary information. (213) 250-5700

Next Steps

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Sonia Luna, President, CEOSonia.Luna@AvivaSpectrum.com

700 S. Flower Street #1100Los Angeles, CA 90017P: (213) 250-5700

Contact Information

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