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IIA-CIA-Part2 exam Dumps Source : Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement
Test Code : IIA-CIA-Part2
Test Name : Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement
Vendor Name : IIA
Q&A : 508 Real Questions
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IIA Certified Internal Auditor -
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(MENAFN - Dubai PR network)
Emiratis constitute 22% of IIA members
Abdulqader Obaid Ali: 'Emiratis to account for forty four% in inner auditing in the coming years
Dubai, December 30, 2018: The UAE inner Auditors affiliation (UAE IAA) has carried out a new success in practicing and qualifying Emiratis to work within the interior auditing domain. With the percentage of UAE nationals, each men and women, in the affiliation accomplishing over 22% by way of end of 2018 and their numbers are anticipated to double within the coming years.
At a ceremony in Abu Dhabi, the association had honoured graduates of the eighth batch of HASAAD, an intensive two-and-a-half month working towards programme in internal auditing committed to UAE nationals. The IIA's strategic partners, Protiviti and PRC, had been represented via their senior officers.
Abdulqader Obaid Ali, Chairman of the UAE inner Auditors association, presented certificates to the graduates who completed their working towards and at the moment are able to take a seat for an accepted inner Auditor Certification exam. He revealed plans to open the HASAAD programme for non-Emirati auditors residing within the country within the coming length.
'This, he talked about, 'indicated the initiatives of the association's to widen its regional reach and international position because the greatest association for inner auditors within the center East and North Africa (MENA) vicinity. there's an increasing demand by means of inner auditors within and outside the country because of the turning out to be value of internal auditors in both the success and governance of agencies, certainly due to the rapid changes reworking the world financial system with extra digitization and wise solutions expanding their presence.
under the wise management of the rulers in UAE, UAE IAA efficaciously validated its means to host the area's greatest inner auditors' conference in might also 2018 with the participation of 3,500 delegates from greater than 82 countries. In 2015, the affiliation launched the HASAAD Programme in line with the ‘Absher' initiative launched with the aid of His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of UAE, with the purpose to put in force the interior Audit charter launched by using His Highness Sheikh Mohammed bin Rashid Al Maktoum, vice chairman and major Minister of UAE and Ruler of Dubai, to qualify greater Emiratis working within the government sectors and provide them with the crucial administration expertise in the box of interior auditing.
The UAE IAA Chairman delivered: 'The HASAAD programme is the core of a massive international tutorial initiative that we plan to implement in the coming length. We hope that UAE will become a worldwide academy for inner auditing and a vacation spot for expertise-seekers in this field, which is witnessing exceptional construction currently because of the entry of digitization, Blockchain and artificial Intelligence (AI) into this a must have sector, which is the core of all financial and building sectors.
Ahmed Bassiouni, Managing Director of Protiviti, noted his business's sponsorship of this specialised programme comes within the framework of its corporate social accountability (CSR) and continuous aid for this sector. The enterprise has been operating in the UAE for more than 10 years and is considered as one of the vital greatest organizations in the inner audit and risk consultancy sector. He counseled the participation of ladies within the programme and observed that ladies have strongly entered the inside audit career right through the remaining few years.
Waddah Halak, professional building supervisor at PRC, talked about: 'The inside auditing profession has witnessed high-quality traits during the last two a long time global. seeing that 2010, UAE has witnessed a big jump during this field and has got notable scientific advantage.
The 8th version of the Programme protected seven male and female members from quite a lot of entities who effectively passed the programme. The graduates praised the HASAAD programme, which brings collectively a bunch of lecturers, specialists and experts within the container from inner and outside the nation, and combines scientific, functional theories and the existence experiences of their future careers and the affect of these on how to strengthen the trend of their knowledgeable performance.
some of the programme graduates, Sheikha Al Nuaimi from First Abu Dhabi financial institution, talked about: 'through the HASAAD programme, which is pleasing in the vicinity, I have been briefed on the latest international trends in the container, which may also be utilised and transferred to my banking field.
Noura Al Bastaki from Mubadala investment enterprise, wired that she has obtained a long journey in a short while through studying from leaders during this field, and learned through them the challenges and alternatives during this box, which makes it possible for her to better apparatus-up for the longer term, certainly given the fast technical advancements in accordance with synthetic Intelligence and the Blockchain.
Myriam Al Khatiri, also from Mubadala investment business, referred to: 'The Programme mentioned a couple of key considerations including the independence of inner auditors and the indispensable traits internal auditors may still possess, such as neutrality, privateness insurance plan, evaluation and scientific comparison, in addition to strengthening the wonderful skilled scepticism characteristic of all workers during this box.
Launched by means of UAE-IAA in 2015, HASAAD aims to beef up trainees' potential, help their skilled competencies and prepare them to deal with more skilled tasks and challenges within their corporations.
No effect discovered, are trying new keyword!in addition, inside auditors are advantageous to corporations that audit third-birthday party suppliers, as they can check that suppliers have enough security controls in area. The E-getting to know route on ISO 9...
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Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement
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Firstly it is up to the government to frame adequate laws and regulations to strengthen the nation’s roots to wipe out corruption while accountants or auditors should strive to keep checks and balances in every entity ensuring transparency
Illustration: Ratna Sagar Shrestha/THT
The profession of auditing has been an enabler to better transparency and accountability in regulated and deregulated business environments. There are approximately 46 primary professional bodies all over the world that provide the framework for self regulation of this profession permitted by statute. All these bodies are affiliated to the International Federation of Accountants (IFAC) while a few do not belong to IFAC as they operate more like specialists’ bodies helping the work of auditors and accountants such as in the field of taxation, forensic auditing and system auditing. The members certified from these institutions are the torch bearers and are bound to uphold the integrity and adhere to the ethical requirements while continuously persevering to maintain the excellence and pride of these institutions.
Every country requires institutions like these. It cannot be the sole responsibility of the Government to keep checks and balances, monitor the business transactions, formulate policies and programs for the effective administration and management and work on the technical aspects of each and every business unit. Certainly Public Accounts Committee (PAC) under the Ministry of Finance is present to oversee the accounts of the Government owned companies. But in certain countries like India and Nepal we notice the Government issuing invitations to the private bodies to conduct audit of these companies on behalf of them. The Government has provided a playground for private audit firms to play a crucial role due to the limitations on their part. This interlinked with other factors has made this profession a challenging one.
Auditors provide an opinion on the veracity of the financial statements. In principle their opinion should be an unbiased one which is free from any circumstantial interference or vested interest of the management. However, in modern times the auditor’s independence is sometimes breached which compels him to tow away from the above factors.
Self review threat occurs when the auditor has also prepared some of the accounting of the fund. Therefore, there should be two distinct professionals, one who is involved in accounting and the other in audit. However this type of practice is impossible in a sole practitioner.
Self interest threat occurs when the firm has only one client or the client is the one from whom significant revenue is generated. In both the cases it is unlikely that independence can be seen which may restrain the auditor from issuing a qualified one. There may be instances where the firm being the statutory auditor is providing advice on internal management of the client. This poses a serious condition on the efficacy of the clients’ internal audit staff. These threats are seen to have many sources and thereby they fragment in a multi dimensional manner ultimately posing risks to the sustainability of this profession.
However in the recent times we have seen some improvements emerging and evolving out of technological developments. This profession seems to reinvent itself by using artificial intelligence and data analysis. In this century there has to be a smart way for auditors to find anomalies in the data provided to them and use human judgments to assess the outcomes of the analyses and tests performed.
Corruption emerges where there is weak architecture in the government’s policies and programs. It spreads in nations where laws are not in parallel to the best practices in the world. Therefore, firstly it is up to the government to frame adequate laws and regulations to strengthen the nation’s roots to wipe out corruption while accountants or auditors should strive to keep checks and balances in every entity while underpinning transparency, accountability and rule of law. Loopholes can be easily found by people who are willing to do so but it is upon the auditors to circumvent their hard efforts to boost the economic growth of the nation as a whole. Therefore professional bodies should work alongside the government, regulators, law enforcement, and international bodies and support the nation to combat bribery, tax evasion, money laundering and the financing of international terrorism.
Auditing needs to be much smarter than it is now. This is only possible with the adoption of technologies that will allow auditors to provide better insights into critical business information and risks. This will in turn build trust and confidence in the capital markets and help drive sustainable growth. The audit profession should also help to build capacity at a country level through engagement with governments that ensures public accounting to be more transparent and ensure proper financial management for the economic growth of the nation. The 21st century auditor has still a lot to learn and deliver. In many cases vague, ambiguous, abstract language should be avoided in disclosure statements and good governance reporting should be encouraged. The profession of audit requires new talent, embarking upon a journey beyond mechanically applying new accounting rules with new assessments, checks and judgments inevitably creating a need for new skills training, which is not only critical but also a prime tool that large firms are using to hire better talent. Costs may rise in bringing up some radical change but it is the need of the hour to secure success.
A version of this article appears in print on March 28, 2017 of The Himalayan Times.
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When telecommunications provider IDT decided to switch auditors from Ernst & Young to Grant Thornton in early 2008, the “driving force was to save money,” says CFO Bill Pereira. It worked. Part of a companywide effort to reduce corporate overhead, the move cut IDT’s $4.3 million audit bill almost in half. Although initially “we were fearful of leaving the Big Four,” says Pereira, “in retrospect, we are really happy with the decision.”
In fact, the switch went so smoothly that IDT declined to announce the renewal of Grant Thornton’s contract in its most recent proxy — because IDT was open to switching again. “We knew there had been changes in the market and we wanted to evaluate where fees stood,” says Pereira. “We didn’t just make the automatic assumption that we’d stick with Grant Thornton. We felt it was our responsibility to do our homework.” (IDT eventually did renew with Grant Thornton — and cut its bill by nearly another million dollars, to $1.42 million last year.)
Can We Talk?
Post-404, Fees Spiked 66 Percent: Study
Welcome to the new auditor-client relationship. In the wake of the Sarbanes-Oxley Act of 2002, audit fees soared, auditors dumped risky clients by the hundreds, and “value-added” services all but vanished under the weight of new independence rules. Today, the reverse is true. Audit fees have been dropping across the board since 2007. In 2004, more than a third of auditor changes were the result of audit firms walking away from clients. Last year, 82% of auditor changes were because companies fired their auditors (among the Big Four, the number was 90%). And companies aren’t just negotiating lower fees; they are also demanding more value — read “services” — covering everything from corporate-board education to competitive intelligence.
No More Sticker Shock
In 2000, the Securities and Exchange Commission required that companies begin disclosing all payments made to their auditors. Prompted by the 1998 merger of Price Waterhouse and Coopers Lybrand, the rule was intended to shine a light on potential independence problems created by nonaudit work. But it also seemed likely that, in a normal market, such transparency would affect the price of audits.
Alas, the ensuing decade proved anything but normal. That Big Six merger was followed quickly by dramatic audit failures that culminated in the Enron and WorldCom debacles, the implosion of Arthur Andersen, and the Sarbanes-Oxley Act and its infamous Section 404, creating the most turbulent era in the history of auditing. “From 2000 to 2007, there was one shock after another, so there really wasn’t normal pricing during that period,” observes associate professor Scott Whisenant of the University of Houston, who studies audit fees.
It is still a bitter irony for finance executives that Sarbox — much of it aimed squarely at Arthur Andersen’s failings as auditor to Enron and WorldCom — turned into a bonanza for surviving audit firms. Between 2004 and 2006, internal-control audits created intense auditor shortages, which rippled through the market, affecting companies not even required to comply with Section 404. The supply-versus-demand dilemma combined with new auditing requirements and auditor risk aversion drove costs skyward during those years.
That has now changed markedly. “We have seen price competition return in 2007 and 2008,” observes Whisenant. Not only have fees been falling, but they have fallen for companies of all sizes, including those not directly affected by 404. Companies with revenues between $100 million and $250 million saw an average 8% drop in fees from 2007 to 2008, while those with revenues of $250 million to $500 million saw them drop 5%, according to a CFO analysis of data provided by Audit Analytics (see “Fees Fall Everywhere,” below).
Chalk up much of that change to a long-delayed reaction to the fee transparency ushered in by the SEC’s 2000 decree. When fee disclosure was first proposed, some experts theorized that it would actually result in higher fees, in that audit firms would no longer offer a discount in the early years of an engagement to win new clients. On the contrary, says Whisenant, “fee disclosure probably gave auditors more information to underbid existing audits.”
But, he adds, it now appears that the larger impact of price transparency is its potential to help clients control their costs once an engagement is under way. “After the second or third year, when the fee starts to revert to a normal level, then the clients have the advantage, because they can start benchmarking.”
In other words, clients are wising up to initial discounting and are leveraging the new transparency not only to help select a new auditor, but to rebuff fee increases in subsequent years.
While Sarbox may have been a windfall for auditors in its early days, it is actually driving fees down now for several reasons. Fee disclosure was intended to shed light on potential conflicts when auditors acted as consultants, but Sarbox went further and outlawed many types of auditor consulting altogether. It also emphasized a relatively straightforward “check-the-box” review of controls. Both aspects of the law make it harder for audit firms to differentiate their services.
“Let’s face it,” says Eric Davis, CFO of SunOpta, “auditing, especially within the Big Four, is a bit of a commodity right now, as long as you’ve got a firm that has the scale and scope to handle your needs.”
SunOpta, a client of PricewaterhouseCoopers (and Coopers & Lybrand) since 1975, switched to Deloitte & Touche at the end of 2008. Davis says the natural and organic food company suspected the fees it was paying PwC were “really at the high end.” The company initially asked PwC to provide a fee benchmark and then, based on the results, decided to take a harder, independent look at its fees. “That’s when we realized that, hey, we are overpaying these guys for what we’re getting and we should put it out to tender,” Davis says.
Publicly traded companies alone spent $16 billion on audit and audit-related fees in 2008, with nearly 7,000 companies paying more than $100,000 each year, and 2,585 paying more than $1 million, according to CFO’s analysis of data from Audit Analytics. Little surprise, then, that half of all CFOs now say they regularly (at least every two years) benchmark what their company pays its external auditor against what their peers pay, according to the latest Duke University/CFO Magazine Global Business Outlook Survey.
The practice seems only likely to grow in the current economy. “It wouldn’t surprise me that audit firms are somehow ending up with lower realization rates in order to keep their clients,” says IDT’s Pereira. “There has been a lot of pressure over the last 18 months or so for companies to cut their costs, whether for audit firms or other service providers.”
Like IDT, shipping company OSG decided to examine audit costs as part of a review of all of its professional-services contracts. The company switched to PwC in 2009 after 40 years as an Ernst & Young client, and saw its $2 million audit cost drop by a third. “We were looking at every line item of expense,” explains CFO Myles Itkin, though when it comes to OSG’s lengthy audit engagement, he adds drily, “after 40 years, everything should be put out to rebid.” Itkin says the move was one of many cost-saving measures that helped drop OSG’s SG&A from $144 million in 2008 to $120 million last year.
Itkin is quick to point out that savings were only part of the benefit for OSG, noting that “certain inefficiencies get built into the process” on both sides during such a long relationship. He estimates that roughly 10% of OSG’s savings came from improvements in the way OSG uses its own internal-audit team to prepare for the audit. The degree to which auditors from PwC would rely on that work then became part of the overall negotiation.
IDT’s Pereira, likewise, says the second fee reduction IDT negotiated with Grant Thornton depended in large part on IDT’s own efforts to streamline and simplify its operations, which in turn allowed the company to argue that its audit had also become simpler.
SunOpta’s Davis says fee negotiations — which now take place annually, if not continuously — focus less on the hourly rate charged than on how much Deloitte & Touche will rely on work done by the internal-audit department. “We try to make sure the controls and binder reviews are done preaudit,” Davis explains, “so that when they do come in they are going through more of our work rather than trying to reinvent something.”
That’s a common refrain among CFOs, who still witness surprising variations in the way each firm audits specific finance processes. “There’s no question auditors have gotten more comfortable with 404 and how to do it, which has allowed them to reduce the fee,” says journeyman CFO Ken Goldman of Fortinet, who sits on several boards and is also former finance chief of such companies as Siebel Systems, Sybase, and Cypress Semiconductor. “Having said that, I’ve seen the different tendencies of different auditing firms, and how they price and charge, and I still think there’s room for better cost efficiency in running audits overall.”
Thanks again in part to Sarbox, audit committees are also paying attention to fees, both because many audit committee financial experts have day jobs as CFOs and because the audit relationship is the ultimate control check. “The audit committee has the responsibility to hire, fire, and evaluate the independent auditor,” notes the most recent copy of the American Institute of Certified Public Accountants’s Audit Committee Toolkit.
Included in the Toolkit’s checklist of questions audit committees should ask: “Was the fee fair and reasonable in relation to what audit committees know about fees charged to other companies, and in line with fee benchmarking data the audit committee might have available to it?”
How Low Should You Go?
Of course, neither CFOs nor audit committees should simply seek the lowest possible cost. While recent trends suggest that now is a good time to benchmark audit fees, that doesn’t mean lowballing your auditor is a good idea. “You have to be careful that you don’t put so much pressure on your auditors that they underaudit,” notes the University of Houston’s Whisenant.
Unusually low or high fees both can signal trouble: weak audits for the former and potential conflicts of interest for the latter. “Companies paying the highest fees [may do so to gain] more flexibility and aggression in accounting,” says Whisenant. He has done studies that suggest that fees that are unexpectedly high or low “can both lead to conditions where the shareholders do not benefit.”
Take, as an extreme case, Fannie Mae, which in 2003 paid a surprisingly low $2.7 million for its audit by KPMG. An accounting scandal the following year subsequently caused the company’s audit bill to soar to $203 million (paid to Deloitte & Touche after KPMG was dismissed).
More recently, in building its case against David Friehling, auditor of Bernie Madoff’s Ponzi scheme, the SEC charged him with raking in “substantial fees.” But, in fact, the opposite is true: that Madoff’s multi-billion-dollar fund paid the tiny audit firm of Friehling & Horowitz a mere $186,000 per year should have been a glaring red flag.
CFOs love to control costs, but when it comes to audits, they also want to make sure they are getting the most they can out of their auditor. Itkin says OSG’s RFP was initially driven by a cost-reduction strategy, but proved “most effective” in securing more services.
Among the services Itkin says he negotiated were international tax planning, director education for both the audit committee and the board as a whole, and access to PwC’s industry specialists. “The relationship has become so much more interactive,” he says, with OSG receiving “on a consistent and frequent basis the insights [the firm] has into changes in accounting policy, major accounting issues impacting our industry or likely to impact our industry, perception as to where the SEC is moving, and a clearer awareness of SEC comment letters [sent to our competitors.]”
And what about the perennial CFO complaint that audits too often consist of recent college graduates camping out in a conference room where they learn to “tick and tie” on their client’s dime? Itkin says OSG has two partners and a senior manager on the account, “each of whom has material industry experience and is [frequently] present here. To us, the commitment and availability of that resource was an important criteria in the selection.”
In the end, says Itkin, “I was interested in securing the same level of service at a lower cost, and we ultimately achieved a higher level of service and a lower cost.”
Auditing your auditor, it seems, is an engagement well worth undertaking.
Tim Reason is editorial director of CFO.
Custom Audit Fee Benchmarks
Do you know how your audit fees compare with those of companies like yours? A new online application from the editorial team of CFO provides a fast and accurate way to benchmark your audit fees against what your peers paid, over a three-year period.
Type in your company name (or industry and revenue size) to generate a peer group and, for a fee, the CFO Audit Fee Report will generate a customized, downloadable analysis. The CFO Audit Fee Report automatically identifies outliers that can skew results and are normally hidden among multiple filings, including restatements, management- or auditor-reported control failures, and auditor changes.
The report allows you to view the full list of companies and auditors in your peer group before you finalize your purchase. The final report includes the following:
Provides an immediate benchmark of what your company pays and how it compares with your selected peer group
Adjustments for Outliers
Analyzes how outlier events affect audit fees within your industry and peer group; provides a summary of outliers within your peer group; and allows you to exclude or include outliers from your overall analysis
Analyzes what each auditor charges the companies in your peer group and how much those fees varied; estimates what each firm hypothetically would charge your company; and shows you each auditor’s market share within your peer group
Provides a complete list of the companies in your peer group, their individual audit firms, fees, and additional data used in the report analysis. CFO sources its data from Audit Analytics, a leading provider of audit-fee information.
To generate your report, or view a sample, click here.
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