Internal Audit Function
IT steering committees could benefit by inclusion of an organizational accounting presence and an internal audit function (IAF). IT project schedules are habitually overrun, which implies budgetary overruns. The business environment has evolved from accepting IT initiatives to including interactive compliance. Business units request complex business systems, data metrics, analytics, and advanced vendor control management solutions to ensure departmental goals are accomplished. Héroux & Fortin (2013) justify the need for an IT internal audit function’s involvement in IT governance as these budgets begin to grow in scale. Validation of resources using given frameworks helps IAF to support IT governance. The key is to include IAF representation in IT steering committees and in communications with senior executives. Héroux & Fortin (2013) validate a survey by conducting a quantitative, non-experimental correlation using a survey of 130 IT governance and IAF executives. In their findings, descriptive statistics were used to interpret data instances. IAF staff participation was executed periodically through performance of audits and highlighted IT risks that might be considered as future threats.
Inclusion of IAF staff in the IT steering committee would enhance development of best practices by illuminating IT overspending and resolution of financial management issues. The ability to coordinate budget increases that require new processes, paperwork, and approval with the IAF IT steering committee member present will encourage cohort sustainability. In addition to improving internal budgetary processes through outsourcing of non-core competency initiatives can prove cost-effective.
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According to the Accenture IT Governance model, effective IT governance depends on the organizational attributes of the firm. It is apparent that Alcan is an efficient, predictable operator that focuses on operational efficiency. Accenture experts assert that such companies rely on maintaining low costs and offering mature capabilities through cost saving and sharing devices, co-sourcing and outsourcing. Ouellette’s plan aims at attaining complete integration, which moves towards cost saving and sharing devices. Therefore, it is evident that Ouellette’s plans are consistent with the suggestions made by Accenture experts.
Accenture has a global interconnected workforce to meet the needs of a multi-polar business environment characterized by multiple centers of economic power and activity, high economic integration across geographies and information and communication technologies which are unparalleled. High collaboration and productivity is fostered today in more than 60 percent of its 178,000-strong workforce by its dependence on infrastructure which is accessible anytime and anywhere. IT has an award –winning CIO organization which is charged with delivering the innovative and effective Information technology (IT) solutions which enable its internal customers to achieve high performance. Thus central to this responsibility is a coherent and universally accepted governance model which is hand in hand with the business strategies that drive business growth.
The federal IT Governance model is good because it “enables IT-based strategic differentiation of business” (Hakikur, 2007, 259). However, there is an opinion that federal IT Governance model “is more of a theoretical construction, than a direct practical solution” (Hakikur, 2007, 259). Though it is claimed that the practical application of the federal IT Governance model is quite doubtful, this claim is quite justifying. According to Hakikur (2007), it turns out that “local IT units tend to be `captured` by the goals of the business unit, while the central IT unit tends to become divorced from the business”
As threats evolve and change with each new technology introduced organizations will also have to strive to improve the techniques used to protect their critical Information Technology (IT) assets. Gartner's IT Key Metrics Data for 2010 which was based on a survey of companies worldwide found that a company spent 5% of their IT budget on IT Security (Kirk, 2010). Connie Guglielmo, a Forbes staff member noted that IT spending will hit $2 Trillion in 2013 and Worldwide IT spending will rise 4.6 percent this year (Guglielmo, 2013).
Iskandar, M., & Salleh, N. A. M. (2010). IT Governance in Airline Industry: A Multiple Case Study. International Journal of Digital Society, 1(4), 308-314.
In manufacture, the efforts may despite the software for identifying the best exercise in the development of the IT projects. In structure of the governing body, the effective governance may include the framework that determines the roles and responsibilities in IT stakeholders. The framework may ensure the IT investments which are aligned and presented according to the objectives and schemes. In IT the main objective is to place the key practice in IT administration.
The purpose of internal auditing and the professionals who provide internal auditing services according to the definition created by the Institute of Internal Auditors is to provide “an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.” Several guidelines and processes have been created to aid an internal auditor in providing the objective, value adding services they’re supposed to. The International Professional Practice Framework is the compass that provides internal auditors
In this case study, an aluminum company is struggling with its information technology (IT) structure. The position of director for IT had been vacant for a year, and Mr. Ouellette has been selected to lead the position. Ouellette discovered that a lot of information systems (IS) were out of date and projects were not being properly supervised from the top down. Without a clear and organized structure, strong leadership, or accountability any company is sure to fail. Ouellette’s ideas in reorganizing the issues within the ALCON IT infrastructure were vital in saving Alcan money and preventing system failure. In addition, there are some recommendations for how a company can identify the best route for improving hardware configurations.
Turban, E. (2009) Information technology for management : transforming organizations in the digital economy. 7th ed. Hoboken: John Wiley & Sons Inc.
Many people mistakenly believe that the greatest risks companies face are from outsiders. However, studies have shown that internal risks are far greater and more frequent than external risks. Many companies have not only lost billions of dollars but have also perished under the weight of internal unethical activities. A popular example of an organization that crashed due to poor Internal Controls is Enron. In the world today, Manual systems are constantly being replaced by Accounting Information systems (AIS). Even though AIS is extremely important to all organizations, it also brings with it, its own unique set of problems. To mitigate the risks and minimize the possibility of fraud or errors, an organization must have effective internal controls.
Internal auditing has become an important part of corporate governance. Internal auditors are tasked with protecting an entity’s assets and producing reliable accounting reports used in decision-making processes. However, the most vital role of today’s internal auditor is testing the efficiency and effectiveness of all aspects of an entity’s operations (e.g., financial and nonfinancial; In’airat, 2015). According to In’airat, the components of corporate governance must cooperate with each other to ensure the efficiency of a functioning business. These components of corporate governance include, but are not limited to, the audit committee, internal auditor, executive management, financial management, and external auditors. Of these components,
“A strong internal control system which includes an independent and efficient internal audit function contributes to an efficient and reliable governance”. (Andrei, 2015). Corporate governance is defined as “the ways in which suppliers of finance to corporations assure themselves of getting a return on investment. (Hamza, T., & Mselmi, N.,2017) In an effort to accomplish a stronger system, the Institute of Internal Auditors created a new concept called the “three lines defense model.” (Andrei, 2015) With this model, the first line of defense consists of the management and support functions. The second line of defense is the control function. Finally, the third line of defense is the internal audit function, which “verifies all the other control functions and to give assurance over the internal control system in place.” (Andrei, 2015) The Institute of Internal Auditors or IIA regulate internal auditors with a set of standards called the International Standards for the Professional Practice of Internal Auditing. The IIA does not discriminate against companies who want to utilize outside sources to perform internal audits if it is done efficiently. “The IIA’s Code of Ethics requires internal auditors to evaluate information objectively, while not being unduly influenced by their own interests.” (Stefanick, Houston and Cornell, 2012) On the other hand, “the IIA believes that oversight and responsibility for the
IT Governance consists of the leadership, organizational structure and processes that ensure that the organization’s IT sustains and extend the organizational strategies and goals. IT governance makes sure that IT related decision should match company objectives.
Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’ roles grew more important. The auditors’ job became more difficult as the accounting principles changed. It also became easier with the use of internal controls, which introduced the need for testing, not a complete audit. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. Computers played an important role of changing the way audits were performed and also brought along some difficulties.
Perry, B., 2005, Organisational Management and Information Systems. [e-book] Oxford; Elsevier. Available at: Google Books . [Accessed 14 November 2013]