The Institute of Internal Auditors presents all things internal audit. In this episode, Dirk de Bruni and Martha Grobbl discussed the, I a's recently released Quality Assessment Manual 2024 Edition with David Petsky. They share their personal experiences with quality assessments and the development of the updated manual, including how it aligns with the new global internal audit standards.
I'm talking today with Martin Grobler and Dirk de Bruney, uh, about the Quality Assessment Manual, which the I I a recently published as Global Guidance.
And I wanna start off just by, uh, asking Martin and Dirk a little bit about their experiences with quality assessments, because this is a rather important project for the I I a and their involvement on the task force was particularly or intentionally, uh, or they were intentionally selected to be on the task force because of their, uh, experiences. And, uh, Martin in particular is a member of the International Internal Audit Standards Board.
So Martin can tell us a little bit about his experience and his, uh, role on the project as a member of the IISB. Thank you, David. Yes. I've been a member of the ISB now for about four years. It's going on four years now. And, um, it's been a fantastic journey that I've been part of the development of the new International standards for internal auditors. Um, and my past experiences in terms of EQA, I've been performing internal quality assessments now for the past 15 years.
Um, I was, I'm currently busy with two at one stage, and I'll about eight during the course of this year already. Um, so the things just keep rolling up and rolling on, and everybody tries to get their eqa done now just before the new standards becomes effective.
Uh, but basically that's my background and, uh, been enjoying every moment of the EQA processes and, and I love giving back to, to the internal audit functions in terms of advice as to how they need to improve and, and need to get up to the leading practice standards and requirements that we we're setting out there. So, so kind of elevating that profession where everyone out there.
Thanks. Thanks, David. Sure. And, and Dirk, uh, can you tell us a little bit about your background with quality assessments? Yeah, sure. Uh, David, uh, thanks, uh, for hosting me. So yeah, a little bit like, uh, Martin, uh, I've also quite a little experience, uh, well, I would say over 30 years in, uh, you know, external and internal auditing.
And, uh, I had, uh, I would say the about luxury and privilege last year to help, you know, with the, uh, with the publication of the international standards, as I would say, well, consultant, uh, to the, uh, standard board. And from an experience from, you know, external quality assessment, uh, I kind of started to, to do some recently, part of the objective was like Martin, you know, sharing my, uh, experience, uh, over 20 years in internal.
And then, uh, yeah, just making sure that, you know, uh, while we do a good quality review, but also help, uh, contribute to the development of those, uh, internal audit functions. And Martin, as the I IBS representative on the, uh, the task force to develop the new quality assessment manual, what, what sort of responsibilities did, did you carry into that project on behalf of that board?
Well, the constant questions from the IS standards board in terms of what the progress is like and what we are focusing on. And I think the biggest responsibility is trying to, to align the require or the requirements of the, the Quality Assessment manual, but also the ideas and the direction of that manual to the discussions that was held around the board tables on a continuous basis in terms of the development of those standards.
Now, those standards came about, um, getting into the background of the essence of what was trying, what, what the standards boards globally tried to achieve with these standards and how that resonates within the Quality Assessment manual. So that feedback was a constant question that that came about from, from the standard board participant.
And Thanks, David. Yeah. Dirk, was there a, uh, particular area of the new quality assessment manual that, uh, that you focused on or that you emphasized in, in your, uh, participation on the, the project?
Yeah, absolutely. So, well, I had, uh, I would say the luxury to kind of focus on domain two, the, the ethics, uh, part, uh, because, well, partly it's, uh, well, it's part of, uh, my personality, I would say, you know, when, when, when you do a role as, uh, chief of the detective, uh, well, yeah, you, you have to do your assignment, uh, for the internal audit, but you have a, an important role to play, uh, in the ethical part development of the company.
So writing that part was interesting, and, and I think I would, uh, a little bit share, like with Martin, I think we had an interesting group working, you know, on the new quality assessment partly, uh, while people from the practice, uh, experienced, uh, very experienced, I would say. And then also, well, uh, I would say, uh, like with people from the academic, already an academic background.
So I, I think the combination of all that, uh, made that, well, yeah, we, we kind of revamped, in my opinion, uh, in fact, the Quality Assessment manual. Uh, I think people will see, if, if you would compare it, I would say to the Blue Book, uh, is gonna be kind of a, a revolutionary change in my opinion. Thanks for that comment, because that, that actually anticipates my next question.
I was going to ask whether either one of you had experience, uh, in your, you know, prior, uh, quality assessments using the prior version of the Quality Assessment manual, which you've also known as the Blue Book. I'll take that one third. You don't mind. Um, The, the Blue Book, and it used to be a light blue book previously, and I think it was even a larger blue book, the first versions that came out.
So I, I've been using the initial, well, first version of the Quality Assessment manual way back when. Um, and just a little bit of background on that. My, my mother was actually one of the writers of the initial Quality Assessment manual. Um, so she's credited with that one. And, and now I take that whole, uh, essence forward into the new qualit. We've been working with that for a long, long time. And, and yeah, so, so it's kind of a family business, a family already thing.
Hope I live up to the expectations that she set as well in terms of this, uh, involvement of my meeting with, with the development of this new Outstanding in, uh, dirt. You at, uh, Yeah. Well, what I would definitely like to add is in, in fact, and again, it's, uh, a comment that we often get, you know, in our profession. Uh, and, and it's definitely not a negative comment to the Blue Book where, you know, in the past, blue might be more considered a little bit like a tick.
The books, I, I think here not only did we revamp, I would say the the content, uh, of the manual, but also kind you that you can use as guidance to come to your conclusion. And, and I think for me, one of the good things, maybe also the challenges is well, you're gonna have to use your professional judgment in order to come to a conclusion.
And, and I think that is what's gonna, well make it on one hand more challenging, but on the other hand, also more interesting, um, you know, from a users and assessors, uh, point of view. Yeah. So how do you think the new manual is aligned with the standards and, and does that make the job of the assessment, uh, easier or does, does it make it harder? Uh, I'll, I'll start first. Uh, I, I think, well, for me, the, well, the manual is totally aligned with the new standards.
So that perspective, I think it makes it easy. I think, well, the beauty and the challenge is that, that, you know, well, yeah, the standards are, uh, principle based rather than rule based.
And in order to come to, you know, or yeah, make it or call it a fair assessment or, uh, a right conclusion, it's gonna use, uh, yeah, you're gonna have to use your well, professional judgment and, and, and looking on, you know, the facts and, and what, uh, the topics you're, uh, you're, uh, looking at that you're assessing. Yes. Uh, David, if I may continue onto that aspect, that the li there's a perfect alignment, I think between the, the new standards and the, the quality assessment manual.
I mean, even the, the domains that you'll find within the, the standards or chapters within the new manual.
So there's that di direct correlation between the two documents and two practices, although there's no copy and paste from the, from the standards, the manual, the manual is more of a, in-depth guide to inter audit functions, as well as to assessors, as to how to go about not only conforming the standards and the rules of those standards, but actually to achieve those principles that has been, uh, set out in the, in the, in the standard.
Can it be used or can this methodology and the manual be used for internal assessments as well as external? Yeah, I, I see no reason why there would be a difference.
And, and in fact, I, I would also like to build on, on, on what Martin said, uh, well, not only there's perfect alignment, but without trying to, you know, write an, an audit manual or, uh, or an audit handbook, I think what we have tried, you know, as, as authors for the new quote, the manual is to kind of give explanation, pay the attention on the areas where you as an assessor or you know, as a user or the manual in order to do your self evaluation,
putting the attention to the points that you need to look that critical to get the conformance with the standards. So I think it be, without wanting to do talk here, I think it's a good, uh, or tool for the Martin, were there parts of the quality assessment manual that, that you, uh, particularly focused on or ei, uh, had an emphasis in in the drafting? Yeah. Well, actually I assessed that a little bit with the main two as well. Um, but I had more of a overall view of all of the domains.
The, the main two was probably the most challenging one, I think. Well, I wanna okay, retract that, let's say for, for us during the discussion, the most challenging part of that domain two was the fact that there's very, there's a lot of aspects of domain two that you won't find documentary evidence of certain numbers, those, uh, attributes that's needed for internal auditors and, and how they act and, and, and how they, they perform certain aspects of their job.
Um, and a lot of that information would be subjective in nature, and you obtain that information through discussion with discussions with stakeholders, stakeholders, um, and that's where a lot of professional judgment from an internal, from an external quality assessment perspective will play a role.
And how you will interpret that information that you receive from through or through those discussions, that's what makes the assessment of the main to a little bit more tricky than some of the other domains where you might have more documentary evidence. Were there other, uh, what were some of the challenges in some of the other domains, you know, for, in terms of drafting, uh, you know, a methodology for assessing conformance or, uh, you know, other significant issues in the other domain?
From my perspective, David, the other significant challenging domain was performing domain three.
Luckily we had a lot of experts that worked on that domain and, and hashed out all of the issues that there were, but I think there was specific challenge in how to assess and to, at the end of the day, right, internal audit functions, when, when, when a lot of the, uh, requirements or essential conditions as they're referred to in the new standards are things that parties outside of the internal audit function actually needs to attend to.
Um, and it's not necessarily things that the internal audit function or the CAE as an individual has a lot of control over. They need to give guidance and educate and get awareness for some of those sections within diary. And to write guidance in terms of, that, I think was quite a challenge for, for the writers of Emanuel as well. And Derek, is that, uh, oh, go ahead. You were gonna answer that? Yeah, I was gonna say, I definitely agree with Mark.
I remember on the mandate, the conversations we had on the mandate mandate and then yeah, how that, uh, all yeah. Pieces together. I remember we had, well, quite some intense, but, but within constructive conversations, so definitely, uh, definitely agree with Martin. I was gonna add in your, uh, practice, is that a topic that comes up, um, in, you know, the assessments of the quality of internal audit functions, right.
You know, how their governance structure impacts the, uh, the quality of the function? I'll grab this one for now, Derek, just, you, you can have the next one initially. I'll grab this one for now. Um, David, yes, absolutely. There's a lot of, uh, discussions during EQA that is happening specifically around, uh, the preparing for domain three D's conformance through for, for the internal audit functions. And it actually differs from organization to organization.
Some organizations, I'm more than comfortable with all of those, uh, requirements within the main three that relates to the board and to senior management. But some organizations have got concerns, and, and those concerns are very much related, more to the knowledge and the awareness, uh, and the expectations from other parties towards internal audit than it is to, as to how, whether they work on form.
It's, it's, there's a lot of education that needs to happen from an internal audit side, and I don't think internal auditors or CAEs generally are geared towards educating them more about and analyzing and evaluating, and then giving feedback in terms of that, not really on the education part, creating that awareness.
So it's a kind of a change, um, a mindset change that's needed from certain parties within internal audit function as well in order to, to approach it in such a way that they, they create that, or, or they elevate that expectation of internal auditing.
Mm-Hmm. And do, do you see this, um, methodology in the quality assessment manual, creating new areas of emphasis for the assessment, or, I mean, you know, in, in alignment with the, uh, the new standards, but do, do you see that, uh, going forward quality assessments will be looking for different things that than they were before or expecting different things out of the, uh, internal audit functions than, than they might have, uh, compared to the old stand?
What I would like to add, and I, I, I think we haven't talked and maybe about what we would call the elephant in the room, the maturity model. I think we kind of added, uh, to some of the documents, you know, assessment of the maturity. We know it's still an area kind of well in development or to be development or to be developed further. Uh, but for me, I think that's, it's kind of a, well, I'm not gonna say a new concept, but a concept that that's kind of introduced with a new manual.
And I think, yeah, doing an assessment of that will kind of definitely, uh, help I, I would say audit functions to, yeah, to develop and to assist where they are and to some degree to see, well, yeah, where, where do we wanna be, uh, in the near future. Can can you talk a little bit about, uh, you know, Martin or Dirk, uh, about how the quality assessment manual incorporates, uh, maturity assessment into the quality assessment In the current, the new 2024 quality assessment manual?
There's kind of an introduction to maturity assessment, but maturity assessments has got a lot of nuances in different organizations and different levels of maturity that they might be with, or the requirement maturity for, for internal audit function.
So the, the assessment manual currently is, is light on guidance, uh, a detailed guidance, let's put it that way, and detailed guidance as to how to go step by step in terms of a maturity assessment and what in everything, uh, around a maturity assessment would entail. But it does provide an CAE and an internal order function with some direction as to what needs to happen for a maturity assessment of that internal audit function.
Um, I think there's, there's a lot of, of, of additional information that can be developed around MA maturity assessments as well as in terms of direction and, and maybe templates and stuff from maturity assessments that's not included in this QA manual, but that's something that I believe that that will be developed as time goes by, well, hopefully in the near future. Yeah. And, uh, so you mentioned, uh, some of the templates that are, uh, accompanying the, the new Quality assessment manual.
And you, we've communicated public that they're, you know, they're to enable, you know, planning field work and reporting. Can you talk a little bit about, you know, how, you know, the practitioner would, would use those templates, uh, with the manual to conduct a quality assessment?
What, what I would say is, I think well, yeah, as a, as a starter or well, so might be experienced, uh, some might be less experienced, but I, I, I think maybe a, a a prerequisite is well, yeah, have a good thorough understanding of the standards to some degree. Yeah, the, the templates are really, uh, built upon the, not only the structure, but also the content of the new standards. And I think if you master very well, the standards using the templates, uh, should be fairly easy, in my opinion.
So I think that's what we've tried to do. Well rewrite not only the manual, you know, there's kind of a, a one-to-one between new standards, new manual. Yeah, please, David, can I just add to that? Yeah.
So the 10% tools are fantastic, and it's like Dirk mentioned a hundred percent aligned to the, the new standards, but so is the content, um, and the content actually gives any assessor or even the, the internal audit function, CAE some guidance as to how to complete those templates and what is necessary to, to really give an indication as to the level of achievement of certain standards.
And eventually it builds up into the overall achievement of the principles that that's underpinned by those standards themselves. That's just what I wanted to add in terms of that. Thanks, David. Yeah, yeah. And I would, maybe as a last point indeed, I think that the four point scale of rating, well, yeah. That, that should definitely help the assessor, whether it's for self-assessment or not, it's gonna definitely help the assessor to, to yeah.
To make his own conclusion and then see where, uh, he's at the end of the day. Yeah. So yeah, you, you, you bring up the, uh, four point, uh, conclusion scale, which is new, right? The, uh, previous version of the Quality Assessment manual, uh, had three levels, uh, of, um, conclusions, right? It was, uh, general conformance, partial conformance, and, uh, does not conform or something to that effect. But the new man, the new manual has four levels.
Can you talk a little bit about why the, you know, why four levels and, and what, you know, what is that offer? Oh, grab this one for now, Dirk, and then you can add on if you want to. Alright. So the, the main reason I think we, we went for the four level scale instead of three level scale, is to get something more definitive as an outcome for internal audit functions. A lot of internal audit functions that really, really well in terms of conformance in relation to the old rating scales.
And they will still just get a generally conformed rating and some internal audit function said, but I'm fully conforming to everything, so please develop something that actually speaks to us as those leading practice internet audit functions as well. So I think that's one of the reasons that resulted in that four point scale coming out. And the four point scale is now not, not, not any, not focusing anymore on conformance, but it's focusing on the achievements.
So the four point scale is now either you do not achieve, and that talks about the achievement of the, the standards and the principles, and then you've got a partial achievement, um, a foot, uh, general achievement. And then you have at the top of this rating scale of full achievement, where the general achievement and full achievement would both be seen as a passing grade, if you put it that way, for internal audit functions.
Internal audit functions should be striving towards that full achievement rating at the end of the day. Another point of emphasis in the new standards was that, uh, quality and, you know, you know, conformance with the standards includes an element of the performance function. Uh, can you talk about, you know, how that, uh, or the new quality assessment manual incorporates that assessment of performance, uh, or the measurement of performance into the assessment of the functions quality?
This actually links onto the earlier question that you asked whether the new, uh, manual makes more difficult for quality assessors, or doesn't make life easier for quality assessments. Now, that's a kind of a depends question, but it specifically relates to this performance outcomes or quality outcomes where, where the new standards, like you mentioned, talks about quality, which performance plus performance, it's not only conformance anymore.
So excellent assessors will have to look at it at the, the approaches and the out outcomes of internal audit functions, not only from a performance perspective, but also from a performance perspective perspective, which is that achievement that relates to the achievement of those principles and the standards.
Like I said, it, it could make life a little bit more difficult for a quality assessor to assess whether an internal order function is not only conforming, but also performing in terms of certain aspects that links to those principles. The quality assessment manual itself gives some insights as to how to go about evaluating that performance and performance aspects that both leads to the quality outcomes.
So that's what, why the why I believe that the quality assessment manual is not just a manual for quality assessments, but it's also guidance document for in audit functions to enhance and elevate their internal audit there. Okay. And so one of the concepts in the standards is that the external quality assessment can be, uh, satisfied with a, a self assessment with internal or with self assessment, with independent validation.
Does the quality assessment manual provide some guidance for that kind of assessment? And does it talk about what the, the relative benefits or a full external quality assessment are versus the SAI? Yeah, think, well, as I said, quality manual without manual, manual, trying to be a, I would say an, an audit handbook, uh, I, I think is, is well a good synopsis, at least for, you know, what you can do as a, as an audit function.
And, and so I think we, we described very well the benefits, you know, of, uh, either going for a full assessment, uh, with external validation or self assessment. So I think upon the reading of the, the manual, you should be able to, to, to make, uh, to make the assessment, uh, for the best role for your organization, in my opinion.
Yes. David, can I add to add that as well, just briefly that it identifies the differences between the two and the pros and the cons of both approaches to, to an assessment.
And in addition to that, it also talks about peer reviews and, and what would constitute a peer review assessment as well as, and I wanted to add that it not only talks about the external quality assessments, which is the self-assessment of independent validation or the full external, uh, quality assessment, but it also gives guidance on the internal quality assessments and what needs to happen in terms of your internal quality assessments that would eventually,
ultimately lead up to your external quality assessments and, and the outcomes of those. And Thanks David. Yeah, sure. In your professional practice, what are you hearing from, uh, chief audit executives or, you know, boards that, uh, engage you for external quality assessments? What are you hearing from them as to what they want out of the, the quality assessment? Right. What are they primarily looking for outta these ways?
I, I would say from my perspective, I, I think, well, they definitely wanna know, well, you know, where they are. And I think with the, the new standards, well, yeah, they're now out for, uh, for about a year. I think they definitely wanna see what, what are the gaps we need to, to fill in order to be, uh, in line with the new standards. So I think that's, those are, in my opinion, about the two more, most, uh, predominant, uh, questions. Martin, is that, is that what you're hearing also?
Well, yes, in addition to, to those comments, I also, when I, when I talk to, to board or audit committees regarding quality assessments and to CAEs, um, most of the time they don't just want a pure assessment on conformance to the standards. They're actually looking for additional things like leading practices and recommendations for improvements. And I was busy with some training today on, on new standards where the one lady actually asked, what, what is that full conformance mean?
Does that mean that, that you're at the top of your game and nothing can be improved? And like my response to that was, there's always room for improvement. It doesn't matter where you are, there's always room for improvement.
So I would expect even when we do a normal external quality assessment and there's a full achievement of everything, that the external quality assess is at such a stage that they can still make recommendations that would lead to improvements of things in order function, whether it be for effectiveness or efficiency purposes. And I think that's what boards, audit committees and chief audit executives are looking for is those value added opportunities, even from external quality assessment.
And, and do, do both of you think that the, the quality assessment manual is a, uh, a useful, uh, and, you know, fit for purpose for, for those, uh, for what the boards and the chief part executives are looking for? Well, lemme put it another way. Do you, do you think that, uh, additional tools or resources would be helpful to provide the complete picture of quality? And Martin talked earlier about additional maturity assessment guidance.
I would actually, uh, David, if I would actually say that the QR manual is, it's not the be all and the end all of of quality in the internal audit function, but it's a definite fantastic starting point. It doesn't just give you the basics. It goes a little bit above and beyond those basics.
Obviously, it doesn't give you the details of maturity and how to determine the different levels of maturity and doesn't give you some insights into those maturities, but it gives you enough information where you can satisfy yourself as an internal audit function if you use that manual that we are definitely either on the right path or we where we need to be. Yeah, I'll edit that. Thanks.
Yeah. If you were talking to a new chief audit executive, uh, you know, maybe starting up, uh, you know, a new internal audit function hasn't gone through an external assessment before, can they use this manual as a guide to establishing processes and a methodology for their internal quality assessments that will prepare them for, you know, a full external assessment? IWI would say, in my opinion, yes. Uh, that's the, the short answer.
And, and again, I think a little bit to add on, on, on what the, or what Martin said just, uh, a minute ago, I think that the manual is kind of, yeah, a guideline and is gonna give you the basics, but I think the chief of the executive will kind of have to think out the box and see, okay, where are we, what's our maturity? And then see, okay, how can we now benefit from a, a good running, uh, uh, audit function?
So I think, yeah, even new, uh, new commerce or people that are gonna do an assessment for the first time, I think the, the, the, the audit, the new audit manual is definitely gonna be a, a good guideline.
So looking forward a couple of years, what, what do you think some of the, uh, most impactful, uh, innovations would be, uh, you know, in the area of quality assessments, you know, would, you know, incorporating new technology, uh, incorporating, you know, a broader, uh, you know, framework of maturity? Where, where, where do you think quality assessments will, will be going in the future? I'll take that one from now.
Embracing technology is one of the key topics that is being discussed across this profession. You'll see in the vision 2035, uh, reports as well, that embracing of technology and, and the more you go around attending conferences and listening to people speaking, AI is obviously at the tip of the tongue of everyone. Um, and those emerging technologies and the use of them in in external quality assessments cannot be denied.
Somewhere along the line, those technologies would have to start playing a role in the, the quality assessment manual. So I don't think this quality assessment manual is going to be the same manual for the next 10 years. I think it's going to be evolving as we move along in terms of maturity assessments. I'm sure that's one aspect that's also gonna be evolved within the QR manual, and it's gonna grow and develop as, uh, time goes by.
But in addition to that, there's not only the quality assessment manual.
I mean, the, the institute is developing so many tools and guidance documents for internal audit functions that need to be used supplementary to the QA manual, if I can put it that way, to develop your internal audit function, or not supplementary, maybe, but even prior to eqa, in order to make sure that your, your internal audit function is on the right way to not only conform, but to achieve the purpose at the end of the day of the internal auditing.
And that's obviously to help an organization create, protect, and sustain value. Yeah, you're kind of stealing my, uh, David, because I was gonna, the tools, it's definitely, you know, an element in the, the execution of the, uh, assessment, uh, self-assessment. But I think it's also a good moment to think about the purpose of your audit function. Why do we have one? What do, what do we wanna achieve? How can we utilize it best, you know, purpose.
It's also in the whole sustainability discussion, it's also kind of a key word or a key, uh, concept or key of the discussion. So I, I think doing an assessment, uh, might help you kind of, well focus again, or, or, uh, ask yourself the question, yeah, what's the purpose of our audit function? Are we on the right track or are we getting the benefit Along those lines, let me ask, uh, what would be your best, you know, response to, so what, why should I get an external quality assessment, right?
If I feel like I've got a mature internal audit function and we have good practices, and we're able to verify our conformance against the standards, you know, why isn't that enough? I think it's like with every time you go for outside advice, I mean, it's an opportunity to have a another view at things, uh, have a fresh look at, uh, at a situation and, and yeah, look at your environment, uh, with a set of, uh, fresh eyes.
So I, I think there's definitely an, uh, an added, uh, value element to it.
Absolutely. I would emphasize that added value, because a lot of the times internal audit functions, they tend, even if they are good and they're running well, and they're forming everything according to plan, there is a point in time where they start wearing blinkers and only focus on the things within their organization and not looking, seeing the bigger picture of what's happening in the industry or the profession and stop forgetting, or they tend to start forgetting
that there's a bigger world out there. Um, so a lot of the times that if I can give advice toor functions, go and get those external quality assessments because it brings a different point of view into your internal function. Alright. Di do you have any final thoughts or suggestions that you would, uh, want, wanna put out there for internal auditors and, you know, as it relates to quality assessments or the new qm?
Again, I, I, I think the, the good thing is, well, we, we revamped, uh, the new, uh, quality manual. I think we, we gave good guidance on what to look for, how to assess, uh, and we didn't have pick the books, uh, the, yeah, checklist, I would say. So for me it's a win, win win. So, um, yeah, I can only, uh, recommend everybody to have a good look at it, to use it wisely and yeah, uh, make progress. Do you have any final thoughts or, uh, words of wisdom for the internal audit community?
Uh, from my side, um, yeah, the, the new QA manual is, is not just a checklist approach, like Derek mentioned. It's, it's a document that, or a manual that can be used by functions to help them develop and grow. And it's not the be all and end all of, of what an internal audit function is, is about, but it does give CAEs some insight as to what the things are that external quality assessors are going to focus on that, what are they going to approach the different aspects of your EQA.
So just in terms of that would, might change the minds of some CAEs as to how they approach certain aspects of their processes. Alright. Now that we're in the appendix, uh, portion of the recording, let, let me ask about topical requirements. I don't hear you, David. Sorry.
Yeah, yeah. So I, I I, I didn't wanna ask, uh, about the topical requirements directly or, you know, uh, in, in the, the full screen, but do either of you, you know, wanna take a stab at, uh, talking about how the quality assessment manual, uh, incorporates, uh, the topical requirements into the assessment approach? I'll be glad to take a stab at that one, David, because the topical requirements is actually an add-on to domain five.
So it's, it's not that there's going to be any difference, difference how you approach an audit or plan for an audit or execute or communicate through the, the engagement itself. Um, the topical requirements is just, uh, additional, I nearly said guidelines, but it's not guidelines. It's, it's not a scope either.
It's not a scoping document either, but it gives the internal audit functions, um, some insights as to what they must be focusing on when they look at those topics, when and if they're auditing those topics. Now, from an external quality perspective assessment perspective, or an internal quality assessment perspective, um, the only time that those topical requirements are gonna be reviewed is if they were performed, if they were part of your plans initially.
Secondly, it's, it forms part of the same selection process as any other audit would form part of. So if you've performed a hundred reviews during the course of the past year and the sample selection is 10, there's gonna be a random selection. If the topic requirements are one of those selections, then that standard that was created for that topic will be used by the EQA assessor to evaluate that process and how you approach that process for that topical requirement.
Um, in addition to that, I've spoken to a number of people already about topical requirements during training sessions and, and, and eqa, and I must say there, there isn't a lot of pushback at this stage, not in the South African context in terms of topical requirements. It's actually being embraced. And a lot of the feedback is we're looking forward to those requirements so that we at least know what the minimum things are that we need to focus on when we, when we approach those topics.
One last question about, uh, the assessment manuals methodology concluding on, uh, domain one, and it's fulfilling the purpose of internal audit, I would say, well, the objective is that you, yeah, you have your, uh, conclusions on all the domains, but at the end, uh, you're gonna have to make a, yeah, a final conclusion on, on the, on domain one purpose of your audit function and, and yeah, so I I, I think where the standard starts with domain one, I, I think, yeah,
from a quality assessment, you are gonna have to do your work and then come to a conclusion. Well, uh, after you've done your assessment, well, do we fulfill with, uh, domain one, what and the purpose of your, uh, your audit function? And Martin, do you get an opinion on why the conclusion model was structured that way? Again, I think we had a lot of discussions on this one. Um, but it is the ultimate outcome of what an internal audit function needs to achieve.
That's the, that's our ultimate goal. And, um, even if you are achieving, say, 70% of the principles within the, the, the standards and well 70% of the principles UNDERST standards, which would probably put you somewhere depending on which ones at a generally achieved rating, they can still be a general achievement of the purpose of internal auditing, uh, where you help strengthen organization's ability to create, protect, and sustain value.
So although it's not completely separate, it is informed by everything else that we do. It's got such a impact on the internet audit profession that it needs to be, um, emphasized by, it's, it's being emphasized by putting it separately, let's put it that way. That's my point of view on that one. Well, thank you Martin, and thank you Dirk, for, uh, taking the time to talk to us about the Quality Assessment Manual. And, and thank you both for your efforts in developing the new manual.
I know I appreciate it. And, uh, the, I i a thanks both of you. Yeah. Hey, David, for Thank you very much for having us. Yep. Happy to share the, uh, experience In bonus content. The i's Deborah Pian joins Robert Perez to discuss the 2024 North American Pulse of internal audit report. Deborah, thanks so much for joining me. It's a pleasure to be here.
So, again, the, the goal for both the, the Pulse and risk and focus surveys, uh, and reports is to share that useful data and benchmarking for internal auditors and CAEs. So what's your approach when you're crafting the questions for those surveys that help accomplish that goal? So let, let's start with the pulse.
Well, definitely for the pulse, you know, that has a, a long legacy, and the real focus is for an internal audit leader, a CAE or a director level, to have information they can use to make their audit plans. So we're always thinking about what the practitioner needs, you know, the metrics that they're already using. We, uh, modify it and change it every year to make it better and to serve our practitioners. Excellent. So, as I mentioned before this, it's in its 16th year.
So what kind of benefits do we gain from having sort of a more than a decade's worth of data? Well over decades worth of data? First, some of the, the points that, that, that we come up with? Well, I think when it really became very relevant, uh, was in the pandemic, because we had asked four years, um, two very basic questions. We said, did your budget increase, decrease, or stay the same? Did your staffing increase, decrease or stay the same?
So when the pandemic hit and everyone's budgets went down and they stopped increasing their staff, we could look back at the 2008 World Economic crisis and compare that to the pandemic and have a, a sense of what might happen in the future, which really did play out about the same way. It was really interesting. And some of the chart we refer to inhouse as sort of the fish chart shows how parallel those two events were in terms of both drop and the rebound, correct? Mm-Hmm.
That is correct. That is correct. So with risk and focus, we made a decision, uh, to take what was a regional product of the European Confederation of Institutes of internal auditors, ECIA, and, and turn it into a global product. First, tell me how you approach such a massive research project. First, you build relationships with the leaders in those regions. So we had a point of contact within each region that helped us also reach out to the, um, institutes of that region.
So we had really broad participation and we were making sure that we were telling the story from that region's point of view, not from our point of view. We were also able to package the data that came from the risk and focus survey in a couple of novel ways. Tell me a little bit about hot topics and, and board briefings. So it's for two different audiences.
So the hot topics are hot topics for internal auditors, and it actually focuses beyond the survey to talk about leading practices to respond to the risks and the audit plan challenges that were raised through the survey. Uh, so that's the hot topics. The board briefing is a summarized version that focuses on how boards can support internal audit in addressing these risks. And the beauty of both of those products is that you created those for the specific regions around the world, correct?
Yes. There, every report is completely different. It has, uh, different, uh, subject matter experts and different topics because each region is different To that point. Was there anything you, uh, any unique challenges or maybe insights that, that came out of, uh, those individual reports? Well, I think it was, it was really interesting, the similarities that we did not expect, and then the differences that, that showed that each region is unique. So, uh, that's what surprised me very much.
In fact, I'm going to reference one of my favorite graphs that reminds me that really the top three or four risks are the same worldwide. Mm-Hmm. But each region had, uh, its unique differences. For example, in Europe and in Latin America, a geopolitical uncertainty was, was a prime concern. We're gonna see that change and expand this year because things have changed even in the course of 12 months. Additional thoughts you wanna share?
I think, you know, the, I I a really is the only organization that has, uh, the ability to reach internal auditors around the world. And it's not just in the big companies, it's, it's not just in the big countries. We actually touch and interact with internal auditors everywhere. I'm, I'm always amazed at the number of countries that participate in our global surveys. It's over a hundred every time easily, and maybe eight or 10 people from that location. But it all adds up
to a very global picture of the profession. And To your earlier point, there's a lot of more similarities among those, uh, challenges and those, uh, risks and risks management than we might expect. Yes, that's very true. So any other thoughts you'd like to share? Uh, at this point, Deborah? Well, you know, if you have not already downloaded some of our reports, many of which are available to the public, I really encourage people to do that.
Our pulse of internal audit report is available to the public. All the risk and focus reports are available to the public from every region. So if you're a multinational organization and you work with Asia Pacific or Latin America or, or North America, you can download the reports, uh, that are relevant to that region. Thank you again so much, Deborah, for joining us today. It's always great to chat with. Thank you very much, Robert. If you like this podcast, please subscribe and rate us.
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