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Internal Audit Process
Credit Union Internal Auditing
from the Ground Up
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John Gallagher,
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SEFCU (New York)
Barry Lucas, Internal Auditor
Desco FCU (Ohio)
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Director Internal Audit
Pat Richey,
Director Internal Audit
Finance Center FCU (Indiana)
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Internal Audit Definition
Internal auditing is 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.
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Role
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Independence and Objectivity
Assurance and Consulting
Add Value and Improve Services
Systematic and Disciplined
Reporting Structure
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SEFCU Organizational Chart
Members
Board Committees
(ALCO, Governance, CEO Compensation)
Board of Directors
(13 members)
CUSOs
Chief
Administrative
Officer
Chief Financial
Officer
Supervisory Committee
(4 Members)
President/CEO
Chief Banking
Officer
Internal Audit
Chief
Marketing
Officer
President
Commercial
Services
Chief Technology
Officer
ORM
Accounting
Finance
Branch Network
Marketing
Commercial
Lending
IT
HR
Collections
Call Center
e-Services
Business Accounts
Facilities
Ops Support
Lending
CRM
Barb Hess
Chief Administrative Officer
John Anderson
EVP, Organizational Risk Management
John Gallagher
Director of Internal Audit
Donna Chardeen
Director of Regulatory Compliance and Fraud Mitigation
Dennis Whiteford
Internal Auditor
Suzanne Alderman
Fraud/Loss Mitigation
Rachael Martin
Internal Auditor
Christine Wheeler
Compliance Analyst
Chrisopher Duwe
Director of Business Continuity, Safety, and Security
Kirsten LeBlanc
Contracts Administrator
Jeffrey Bregenzer
Commercial Loan Review Officer
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Responsibilities
o Internal Audit Charter
o Supervisory/Audit Committee Charter
o Job Descriptions
o Audit Staff Structure
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Relationships and Politics
 Management
 Employees
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Relationships
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Supervisory & Audit Committees
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Board of Directors
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Relationships
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External Auditors
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Regulators
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QUESTIONS ?
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Performing Audit Work
Where Do I Start?
Risk Assessment
Audit Universe
Models
Risk Priority
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Performing Audit Work
Where Do I Start?
• Business/Audit Plan
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Performing Audit Work
Where Do I Start?
• Audit Scheduling
• Distractions
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Fraud Investigation
New Products / Services
Training / Vacations
Turn over
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Performing Audit Work
Objectives
- broad statements
- risks
Scope
- who
- what
- when
- where
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Performing Audit Work
Audit Program
- written procedures
- interview questions
- collecting information
- testing, sampling
- analyzing
- evaluation
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Performing Audit Work
Workpapers
- support findings
- restricted access
- retention
- testing, sampling
- analyzing
- evaluation
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Performing Audit Work
QUESTIONS ?
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Communications and Follow Up
Audit Reports
Management & Internal Audit need to agree up front
• Findings
• Recommendations
• Report Structure
• Who gets them?
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Communications and Follow-Up
Follow-Up
• Follow-up Audits
• Monitoring results
• Implementation of recommendations
If you do not do this – Nothing happens!
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Communications and Follow-Up
Supervisory / Audit Committee Meetings
• Frequency
• Structure
• Agenda
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Communications and Follow-Up
QUESTIONS ?
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Tools and Resources
Technology
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Paperless auditing
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Internet tools
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Analytical review using audit
software
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Tools and Resources
Basic Internal Controls - COSO
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Credit Union Objectives
- Operations
- Financial Reporting
- Compliance
 Internal Control Components
- Control Environment
- Risk Assessment
- Control Activities
- Information and Communication
- Monitoring
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Tools and Resources
Enterprise Risk Mgmt - COSO
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Credit Union Objectives
- Operations
- Financial Reporting
- Compliance
- Strategic
ERM Components
- Internal Environment
- Objective Setting
- Event Identification
- Risk Assessment
- Risk Response
- Control Activities
- Information and Communication
- Monitoring
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Tools and Resources
International Standards for
the Professional Practice of
Internal Auditing
- Attribute Standards
- Performance Standards
- Quality Assurance Review
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Tools and Resources
Control Self-Assessment
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Management Buy In
Business Objectives
Identify Risks
Gather Best Practices
Provide Documents
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Tools and Resources
Resources
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Professional Journals
- IIA, ACFE, ISACA
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Professional Standards
- COBIT
- GTAGs
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Current Issues of Internal Auditing – Governance
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Websites
- Credit union industry, regulatory, professional
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Audit Professionalism
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Certification
- CIA – Common Body of Knowledge
- CFE
- CUCE, NCCO
- CISA
- CPA
- CFSA
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Audit Professionalism
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Training
- Conferences / Seminars
- Local Chapters
- Webinars / Teleseminars
- Compliance Schools
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Audit Professionalism
ACUIA
 Website
 Message Forum
 Membership Directory
 Audit Guide
 The Audit Report magazine
 Lending Library
 Conferences, seminars
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Tools and Resources
QUESTIONS ?
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