Internal Audit, Risk, Business & Technology Consulting

Protiviti Perspective provided by Nikhil K., New Delhi

NEXT GENERATION IA – IN

PURSUIT OF INNOVATIONOctober 28, 2019

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

INTRODUCTIONS

2

Managing Director, Protiviti

Andrew Struthers-Kennedy

Senior Manager, Protiviti

Jared Bourcier

Image Image

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

SESSION TOPICS

1

2

3

Innovation in Internal Audit – Why & How?

Components of Next Gen

Emerging Technologies and Approaches

INNOVATION IN AUDITWHY? WHAT? HOW?

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

ON THE MINDS OF EXECUTIVES

5

2019 RANK 2018 RANK RISK ISSUEYOY

TREND

1 10Existing operations meeting performance expectations, competing

against “born digital” firms

2 6 Succession challenges and ability to attract and retain top talent

3 4 Regulatory changes and regulatory scrutiny

4 3 Cyber threats

5 2 Resistance to change operations

6 1 Rapid speed of disruptive innovations and new technologies

7 7 Privacy/identity management and information security

8 9 Inability to utilize analytics and big data

9 5Organization’s culture may not sufficiently encourage timely

identification and escalation of risk issues

10 12 Sustaining customer loyalty and retention

Source: Executive Perspectives

on Top Risks for 2019

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

THE CHALLENGE…

6

Is IA using enterprise data efficiently to conduct risk assessments and continuous monitoring?

Has IA added resources and skill sets to address increased expectations from stakeholders?

Has IA started to increase use of technology to enhance the internal audit function?

Is IA still performing (and reporting) audits and reviews in the same way as in years past?

Is IA positioned to respond to changing key business risks associated with digital transformation initiatives?

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

ESSENTIAL OBJECTIONS OF NEXT GEN IA

7

A range of innovative approaches, tools and governance enablers,

including a culture of innovation to…

Improve assurance by increasing the focus on key risks… in time1

Make internal audit more efficient2

Provide deeper and more valuable insights3

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

WHERE THINGS STAND

8

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

WHERE THINGS STAND

9

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

NEXT GENERATION INTERNAL AUDITCompetencies, qualities and components to effect change

Next

Generation

Internal Audit

IA Strategic Vision

Resource & Talent

Management

Aligned AssuranceAdvanced Analytics

Process Mining

Machine Learning (ML)

Artificial Intelligence (AI)

Continuous Auditing Dynamic Risk Assessment

High Impact Reporting Agile Audit Approach

Robotic Process

Automation (RPA)

Organizational

StructureNext-

Generation

Internal

Audit

PROCESS MININGDATA DRIVEN INSIGHTS

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

PROCESS MINING FOR AUDIT INSIGHT

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

PROCESS MINING DEMO

Uses data from enterprise systems to visually reconstruct how

processes actually perform… what is actually happening, creating a

complete process map

AUTOMATION IN AUDITINCREASED EFFICIECNY AND EFFECTIVENESS

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

AUTOMATE EVERYTHING?

15

• Brainstorm candidates

• Evaluate for technical feasibility and business value

• Prioritize automation opportunities

• Follow the path of least resistance to automation

• Evaluate through POC… prove what’s possible

• Scale

Follow a disciplined approach to automation…

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

PURSUING RPA… HOW TO START

Opportunity

Assessment

Initiate

Program

Pilot

Deployment

Proof of Concept

Deploy, Operate

& Monitor

Roadmap

Identify automation

candidates and

completing a Proof of

Concept…

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.17

USE CASES FOR INTERNAL AUDIT

Artifact Gathering

Admin / PMO / eGRCControl Activities

Testing

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

RPA IN ACTION…

18

RPA In

Action

Use case on evaluating & prioritizing automation candidates and

demonstration of the bots-in-action for control testing

AGILE FOR INTERNAL

AUDITFLEXIBLE & RISK RESPONSIVE

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

AGILE FOR AUDIT?

20

• Our POV… focus on delivering quality product

faster and more efficiently, with improved

stakeholder engagement

• Instill an agile mindset and empower personnel to

innovate and find way to do things better

Broad Range of Definitions for Agile in IA…

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

AGILE AUDIT… WHAT AND WHY?

21

Product

Backlog

A

B

C

F

Sprint

Backlog

D.1

D.2

D.3

D.4

Sprint

Planning

Daily

Scrum

SprintSprint

Deliverable

E.1

E.2

Sprint Review

&

Retrospective

IA D

eliv

era

bleD.5

Product and Sprint Backlogs (Risk

Areas) Drive Work

Real Time Deliverables and

Feedback

Iterative and Incremental Fieldwork

/ Testing

Plan Work Review

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

AGILE AUDIT… WHAT AND WHY?

22

Source: Protiviti 2019 Internal Audit Capabilities and Needs Survey

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

EXAMPLES OF AGILE IA

23

Focus on Benefits vs. Strict Adoption

More focused “sprint-like” delivery of

audits – shortening time-to-report

An iterative “follow-the-risk” type

approach to audit delivery

Iterative, high-touch, and flexible reporting process

Integrated (cross-functional) teams

formed into “pods” delivering a series

of audits (backlog)

Increased involvement of IA and

business leadership (standup and sprint

review meetings)

Audits broken down into sprints with

focus of delivery of results and direct

feed into reporting

Emphasis on data gathering in advance of project

INTERNAL AUDIT TOOLKITWHAT’S OUT THERE?

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

THE IA TOOLKIT

25

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm

and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

THOUGHT LEADERSHIP

26

Q&A

© 2019 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not

licensed or registered as a public accounting firm and does not issue opinions on financial statements or

offer attestation services. All registered trademarks are the property of their respective owners.