Title: Internal Audit Quality: Developing a Quality Assurance and Improvement Program by Sally-Anne Pitt

Summary:

I. Introduction and Overview
“Internal Audit Quality: Developing a Quality Assurance and Improvement Program” by Sally-Anne Pitt is an essential guide for internal auditors aiming to enhance the quality and effectiveness of their audit function. The book, published in 2014, delves into the various elements necessary for developing a robust Quality Assurance and Improvement Program (QAIP) within the internal audit framework. This summary aims to encapsulate the key points and actionable advice offered by Pitt in a structured format.

II. The Importance of QAIP in Internal Audit

Key Point: Definition and Necessity of QAIP
The QAIP is a comprehensive approach to ensuring an internal audit’s work adheres to professional standards, achieves its objectives, and continuously improves. Pitt argues that a well-designed QAIP is indispensable for enhancing the credibility and efficacy of the internal audit function.

Actionable Advice: Establish a Clear Understanding of QAIP
Individuals should start by familiarizing themselves with the core concepts and components of a QAIP. Engage in training sessions or workshops that focus on the basics of quality assurance in auditing.

III. Establishing the Foundation

Key Point: Governance and Leadership Commitment
Pitt emphasizes that successful QAIP implementation begins with strong governance and unwavering commitment from leadership. This includes obtaining buy-in from the board and senior management, which is critical for sustaining quality in the long term.

Actionable Advice: Secure Leadership Commitment
Schedule a meeting with senior management to discuss the benefits of implementing a QAIP. Use case studies and data to highlight the positive impact of QAIP on audit efficiency and effectiveness.

Example: Engaging Stakeholders
Pitt references organizations that successfully engaged stakeholders at the commencement of their QAIP journey, ensuring alignment with corporate goals.

IV. Developing QAIP Framework

Key Point: Structured Approach and Documentation
A structured framework is necessary to provide a consistent approach to quality assurance. Pitt details the essential elements such as policies, procedures, and documentation that govern the QAIP.

Actionable Advice: Develop Comprehensive QAIP Policies
Draft detailed QAIP policies and procedures that delineate roles, responsibilities, and performance criteria. Utilize templates and guidelines provided in Pitt’s book to ensure completeness.

Example: Documentation Standards
An example given in the book relates to an organization that established exhaustive documentation standards, which streamlined audit processes and facilitated consistency across the board.

V. Internal Assessments

Key Point: Regular Internal Quality Assessments
Regular internal assessments, including self-assessments and ongoing monitoring, are critical for maintaining audit quality. Pitt explains how these assessments help in identifying areas for improvement before external reviews.

Actionable Advice: Schedule Internal Quality Assessments
Create a schedule for periodic internal assessments. Use checklists from the book to conduct self-assessments, ensuring all aspects of the audit process are evaluated.

Example: Self-Assessment Checklist
Pitt includes a comprehensive self-assessment checklist that organizations can adapt and apply to systematically review their internal audit functions.

VI. External Assessments

Key Point: Importance of Independent External Assessments
External assessments, conducted by qualified, independent reviewers, validate the internal audit’s performance and adherence to standards. Pitt discusses the importance of such reviews in achieving objective evaluations.

Actionable Advice: Plan for External Quality Assessments
Identify and contract with qualified external reviewers to conduct formal assessments regularly. These could be every five years, as per the International Professional Practices Framework (IPPF) standards.

Example: External Validation
The book shares an instance of a company scheduling regular five-year external assessments to ensure their internal audit function meets global standards.

VII. Reporting and Communication

Key Point: Transparent Reporting Mechanisms
Effective communication and transparent reporting are essential components of a QAIP. Pitt underscores the importance of sharing assessment outcomes with relevant stakeholders to foster transparency.

Actionable Advice: Develop a Clear Reporting Protocol
Establish a protocol for reporting QAIP results that include comprehensive, clear, and actionable information. Integrate feedback loops to facilitate continuous improvement.

Example: Stakeholder Reports
Pitt offers examples of tailored reports to different stakeholder groups, ensuring the communication is relevant and understandable for each audience.

VIII. Continuous Improvement

Key Point: Focus on Continuous Improvement
A central tenet of QAIP is continuous improvement. Pitt discusses methods for integrating feedback from internal and external assessments to refine processes and elevate audit quality continually.

Actionable Advice: Implement an Improvement Plan
Based on assessment results, develop and implement improvement plans targeting identified weaknesses. Use process improvement methodologies like Six Sigma or Lean where applicable.

Example: Process Refinements
An example in Pitt’s book describes a department that used QAIP results to streamline its audit planning process, reducing cycle time and increasing efficiency.

IX. Leveraging Technology

Key Point: Utilizing Technology for QAIP
Technology plays a crucial role in augmenting the QAIP. Pitt highlights various tools and software that can assist in tracking quality metrics, automating assessments, and reporting.

Actionable Advice: Invest in QAIP Tools and Software
Evaluate and invest in quality management software that provides functionalities essential for implementing, monitoring, and reporting QAIP activities.

Example: Software Implementation
The book references a case where an audit department significantly enhanced its quality monitoring by implementing audit management software that automated many of the QAIP functions.

X. Training and Development

Key Point: Ensuring Continuous Professional Development
Continuous training and development are vital for maintaining a high-quality internal audit function. Pitt stresses the importance of investing in the auditor’s professional growth.

Actionable Advice: Establish Training Programs
Create a structured training and development program focusing on key areas such as auditing standards, new tools and technologies, and emerging risks.

Example: Professional Development Plans
Pitt points to organizations that created individual development plans (IDPs) for each auditor, ensuring targeted training aligned with personal and organizational goals.

XI. Cultural Integration

Key Point: Embedding a Quality Culture
A quality culture is indispensable for the success of a QAIP. Pitt advises on ways to embed quality-centric values and behaviors within the internal audit’s culture.

Actionable Advice: Foster a Quality Culture
Initiate programs to promote a quality culture, such as quality circles, rewarding high performance, and encouraging open communication about quality issues.

Example: Quality Workshops
The book highlights an example of an organization that held regular quality workshops to instill a culture of continuous improvement and quality awareness among its audit staff.

XII. Benchmarking and Best Practices

Key Point: Benchmarking for Continuous Improvement
Benchmarking against best practices and peers offers valuable insights for improving audit quality. Pitt discusses methods for effective benchmarking.

Actionable Advice: Engage in Benchmarking Activities
Regularly benchmark your QAIP against industry best practices and standards. Participate in professional associations and forums to share and learn from peers.

Example: Peer Reviews
As illustrated in the book, an internal audit department arranged peer reviews with similar organizations to identify areas for improvement and to adopt best practices.

Conclusion

Sally-Anne Pitt’s “Internal Audit Quality: Developing a Quality Assurance and Improvement Program” is a comprehensive resource that provides internal auditors with the necessary tools and insights to enhance the quality of their audit functions. By embracing a structured approach to QAIP, leveraging technology, promoting a culture of continuous improvement, and engaging in regular assessments, organizations can significantly increase the value and effectiveness of their internal audit departments.