Module 3B Managing Resources

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management requests. Budgeting should also address the needs of the internal audit strategic plan, such as investment in new audit software, specialist expertise, and training. Step 4: Determine training, co-sourcing, and administrative expenses. “Budgets and schedules must also allow for time off, as well as time spent on administrative tasks, training, and activities such as quality assurance and audit follow-up.” Continuous training is needed for auditors to maintain their competency. In addition, the planned engagements in the plan may call for competencies not readily available from the existing team of auditors. This may be resolved over time by training and recruitment but more immediately it may require the use of guest or external services. Step 5: Review and approve – independence matters. “It’s important to review the operating budget periodically to ensure that it remains realistic and accurate, identifying and reporting any variances promptly. In most organizations, the CAE prepares the budget and senior management reviews it, but final review and approval is left to the audit committee or board of directors.” For the survey undertaken to support the guidance, The IIA found “CAEs were significantly more likely to state they had sufficient resources at organizations with independent audit committees than at organizations where the audit committee was not independent of management.” 24 Have established the budget and had it approved, the head of the unit must monitor actual incomes and expenses against the plan. This is discussed in sections 3A.2.5 and 3A.3.4. 3B.1: Reflection Is your internal audit function in full conformance with these Standards (2000, 2010, 2030)? How much autonomy does the head of the internal audit unit have in managing the budget and other resources? Who approves the staffing and budget for the internal audit unit? Are these arrangements consistent with internal audit independence? 3B.2 Performance Management Performance management requires the identification of risks and the implementation of controls for ensuring economic, effective, and efficient resource utilization. Managing performance needs to take place at every level of activity. 24 “Budgeting the Internal Audit Function: How Much is Enough?” Tone at the Top, The IIA, 2018. 44
• Individuals are responsible for managing their own performance, including time-keeping, maintaining due diligence, following instructions and procedures, reporting periodically to their supervisor, and escalating issues requiring someone else’s attention. • Supervisors are responsible for managing the performance of their team members individually and collectively. A typical performance management cycle comprises: o Agreeing individual goals commensurate with role, responsibilities, ambitions, and competencies, and aligned with team-level and organizational objectives. o Providing time, tools, resources, training, and sufficient autonomy and supervision as required. o Monitoring performance. o Providing feedback, both as encouragement and in highlighting areas requiring remediation. o Formally appraising performance according to a regular cycle and in consultation with the individual, allowing them to account for their own performance. o Recognizing achievements and allocating rewards according to policy. o Identifying and creating opportunities for personal and professional development and progression. o Reporting the results of performance evaluation up the chain of command. o Acting as an advocate for their team members, giving due credit for their accomplishments. o Agreeing goals for the next cycle. Team leaders are responsible for achieving the goals assigned to their unit and for managing the performance of individuals. This continues upwards to the highest levels of the entity with ultimate accountability to stakeholders for fulfilling organizational purpose economically, effectively, efficiently, ethically, and sustainably. This process of performance management links with the concepts of managerial accountability discussed in Module 2 and applies to internal audit functions as much as any other department. Performance management is a natural part of risk management and internal control. Organizational-level objectives need to be cascaded down to every level so that goals of departments, teams, and individuals are all aligned. Decision-making and implementation of controls are most effective when they are delegated to the lowest level of competence necessary to enable managers to manage and leaders to lead. As goals are assigned, they must be accompanied by responsibility, autonomy, and resources. This requires trust. Supervision is part of the system of control but too much supervision and monitoring constitutes micro-management, which is inefficient, intrusive, and often counter-productive. Individuals resent excessive scrutiny since it communicates a lack of trust in their integrity and ability. 45
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Module 3B Managing Resources

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