Transcript Internal Audit Plan and Its Alignment to Risk Strategy

Internal Audit Plan and Its
Alignment to Risk Strategy
Makhosandile Kwaza
Are Internal Auditors Watchdogs?
If you do not plan any way is the correct way
What is Internal Audit Plan
Legislative framework
• Section 165 (2) (a) of the MFMA requires that the
Internal Audit of a municipality or municipal entity to
prepare a risk-based audit plan and an internal audit
program for each financial year.
• On the other hand, section 45 (a) of requires that the
results of performance management in term of
section 41 (1) (c) be audited as part of the
municipality’s internal auditing processes.
International Standards for Professional Practice
of Internal Auditing (ISPPIA)
• Standard 2010 requires that the chief audit executive
to establish risk-based plans to determine the
priorities of the internal audit activity, consistent
with the organization’s goals.
• Standard 2010.A1 – The internal audit activity’s plan
of engagements must be based on a documented
risk assessment, undertaken at least annually. The
input of senior management and the board must be
considered in this process.
Risk Management
• A result of the risk assessment
• Strategic level – municipal wide risks
• Departmental level – departmental risks
• IA plan takes into account strategic risks;
departmental risk and other factors like AG
findings
Time allocation
0%
15%
5%
5%
5%
70%
Internal Audit execution
Training
Support to LM's
Adhoc internal audits
IA unit management & admin
Linking your plan to strategic risk
2012/2013
No.
Objective
Risk name
Context / Root cause
1.
1
To provide quality and
sustainable drinking water
in an integrated manner, to
all consumers in the district
2.
3.
Restricted water availability (worst drought in
130 years
Climate change and associated disasters
Lack of integrated water reporting
Climate change, drought and
floods (Sustainability)
IDP/Budget process
Supply Chain Management Processes
2
To increase internal and
external project spending to
80% of projected
expenditure by 2015
Poor project management
1.
2.
3.
4.
5.
Co-ordination of activities
Lack of monitoring and evaluation
Roll over's
Procurement deviation of SCM policy
Project Management Capacity (Skills &
Personnel)
Linking your plan to strategic risk
2012/2013
No.
Objective
Risk name
Context / Root cause
1.
3
Provision of adequate, portable
and sustainable water services
infrastructure by 2014
2.
3.
Poor asset management
4.
5.
6.
7.
Outdated infrastructure (Inherited old
infrastructure)
Increased maintenance costs
Loss of revenue opportunity on water and
sanitation services
Underutilisation of resources
Poor fleet management
Poor implementation of asset disposal policy
Lack of asset management planning
Infrastructure asset management review
Asset management review
Fleet management review
Asset disposal review
Revenue management review
Water leakages review
1.
2.
4
To ensure that the district remains
financially viable
Inadequate funding and revenue
management
3.
4.
5.
Insufficient funds to meet mandate (MTEF)
Inefficient utilisation of existing funds (poor
cost itemisation)
Poor systems – revenue collection
Customer care
Leakages – water
2/3 (two thirds) of district dominated by
indigent
dependent on grant funding
Operational plan