MSc Audit Management and Consultancy

Consultancy ModuleIntroduction

CON 1

Learning Objectives

• Develop a a consultancy strategy• Reflect upon the relevance of consultancy in relation to

the role of the internal auditor

Why study consultancy?

• Natural element of internal audit work• Internal Audit whilst independent does not operate in

isolation to everything else that’s going on around it• Sometimes more than assurance required• Understanding of relationship of organisation to

stakeholders• Understanding of key organisational drivers, objectives

or targets• Obtaining maximum added value• How thin is the line anyway?

Analysing the Environment

The external environment

Competitive environment

Figure 3.2 The five forces of industry competitionSource : Adapted with the permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group, from COMPETITIVE STRATEGY: Techniques for analyzing industries and competitors by Michael E. Porter. Copy right © 1980,1998 by The Free Press. All rights reserved.

6. Introducing Consultancy

             Internal Auditor Roles in 1980s(Leading Edge Internal Auditing, Ridley and Chambers, 1998)

2060-2

Defining Consultancy

What do you think “Consultancy” means

Definition

• From Latin consultare - ‘to discuss’• More recent derivation – to seek counsel• Our understanding – to seek professional expertise in a

particular field• Thereby gaining understanding of best practice in order

to achieve effective business solutions within an acceptable timeframe

The External Environment

Identifying environmental influences – PESTEL analysis. Source: Adapted from Johnson and Scholes (2002), p. 102.

Forms of consultancy

• Management• Finance• Environment• Entertainment• Technology• Law• Human resources• Marketing• Medicine• Life management

• Economics• Public affairs• Communication• CSR• Engineering• Systems design• Waste management• Business Planning• Governance• Risk

Institute of Internal Auditors

..is an independent, objective assurance and consulting activity designed to add value and improve an organisations operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

IIA (2009)

Defining Consultancy

Your experience

DISCUSS with your neighbour:

A specific example of when you feel that you did some “Consultancy”

workThen ask yourselves:-How did you feel about the experience?What was your specific role – was it a team or individual effort?Was it a success?How did you measure success/failure?What did you personally gain from the experience?What difficulties did it present to you as an auditor?

Defining Consultancy

Consultancy and research in academia

• Consultancy normally involves work for a single client; they will then normally own and get value from the output

• Research normally involves outputs that will have wider implications and value beyond a single client; such as a sector, a profession, a society etc

• So if you do a dissertation that is case study based (example: specifically for your sponsor or employer), then you must ensure it is NOT a consultancy project

Summary

• An understanding of the environment is essential if internal audit is to help achieve corporate objectives and add value

• Internal Audit may have a wider understanding of certain influences than other internal managers – advisory and consultancy role

• Reflection of aspects of risk, development, performance, value for money are an essential part of a consulting role.