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DRIVING INNOVATION Presented by:
INTERNAL AUDIT - HISTORICALLY Historical View v Limited, no requirement or expectation for innovation from IA v Utilise approved frameworks, guidelines and standards Challenges faced by IA Globally, Internal audit departments are faced with many challenges which include (but are not limited to): v Resource limitations - Doing more with less v Lack of Process Restructuring – planning, fieldwork, reporting v Limited use of technology and (e. g. data analytics and data mining etc. ) v Inability to demonstrate their “value add”.
INTERNAL AUDIT - FUTURE ! Reality - Organisations are continuously evolving ? Question – What is the impact of continuous organisational change on IA “To raise new questions, new possibilities, to regard old problems from a new angle, requires creative imagination and marks real advance in science. ” Albert Einstein
IA– Trusted Advisor A successful marketing initiative to create awareness around the IA mandate, the services it offers as well as its vision to be the “Trusted Advisor”. IA needs to be in the know - including technological advancements and client expectations to ensure that IA becomes a trusted advisor. IA needs to change and evolve with our clients to ensure that we add value. 4
AN EVOLVING CITY v The City is undergoing constant change v Most recent changes includes the Organisational Development and Transformation Plan (ODTP); v Transversal Management; and v The establishment of a PROBITY department.
DIFFERENT APPROACH “We can’t solve problems with the same kind of thinking that created them. ” Albert Einstein
PROBITY DEFINITION The definition of PROBITY as per the Oxford Dictionary: “The quality or condition of having strong moral principles, integrity, good character, honesty, decency”.
BRANCHES PROBITY Internal Audit Forensics REG COMBINED ASSURANCE Ombudsman
Probity – ODTP Evolution Portfolio Manager: Probity Lindiwe Ndaba Chief Audit Executive Bazil Vink Purpose: To provide independent, objective assurance and improve the City’s operation. It helps the City accomplish objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes. Functions: • The provision of quality assurance services • The provision Governance and Risk services • The reviewing of financial information ( accounting procedures and practices • The reviewing of the performance (value for money) of specific business functions through root cause analysis • The provision of Information system services Chief Risk & Ethics Governance Ludwig Geldenhuys Chief Forensics Oliver Josie Ombudsman Mongezi Menye Purpose: To deliver an effective integrated Risk Management (including Combined Assurance & Business Continuity Management) function to the City and entrench ethics principles in the organisation Purpose: To entrench good governance within the organisation by intensifying the fight against fraud, corruption and economic crimes through for the benefit of our ratepayers, staff and the broader community Purpose: To consider and investigate complaints about maladministration, injustice and poor service lodged by residents of Cape Town in an impartial /neutral manner Functions: • The provision and Co-ordination of an Integrated Risk Management Framework for the City • The establishment and roll-out of Combined Assurance City Wide • The establishment and roll-out of Business Continuity • Taking overall responsibility for the facilitation of implementation of the City of Cape Town ethics strategy, programmes and practices. The City is in the process of instilling ethical behaviour to all employees as part of the daily performance of their functions. Functions: • Providing a reactive forensic investigatory service at the behest and authority of the City Manager in respect of issues relating to unethical conduct, fraud, corruption, maladministration and/or negligence • Providing a proactive awareness service; and • To monitor and report on the compliance and implementation of forensic recommendations by Executive Management Functions: • The provision of a safe and confidential forum for individuals to surface problems • The consideration of issues while remaining neutral with respect to the facts • The investigation of complaints in an impartial manner • The referral of individuals to appropriate resolution resources • The facilitating and mediation • Of informal resolution processes • The assisting in surfacing issues to formal resolution channels • Provide information of complements received
INNOVATION v v New ideas and technologies to keep up with the rapid pace of change when old systems (or processes) struggle to adapt. Requires “out-of-the-box-thinking”.
Probity – Driving Innovation through Key Strategies In order for Probity to perform its function effectively and efficiently there needs to be integration and standardisation of key processes and reporting mechanisms across all branches e. g. client relationship management, data analytics, quality assurance, etc.
King IV Campaign Probity was one of the key drivers behind the City’s adoption of King IV on 5 December 2017, as the foundation of the Resilient City of Cape Town, further demonstrating to our internal and external stakeholders, our commitment to good governance as a wellrun and effective administration. City of Cape Town (City) King IV Governance Seminar 2 August 2017 08 h 00 – 16 h 00 Mayoral Banqueting Hall Cape Town Civic Centre Envisaged that City of Cape Town will become a member of IOD(SA) Probity to roll-out a strategy to introduce King IV to Directors and Managers through seminars, training, awareness interventions to enable management to implant principles in daily operations. 12
Quality Assurance & Improvement Program (QAIP) Internal Audit developed and implemented a Quality Assurance and Improvement Program, which will be rolled-out to other Probity branches to ensure service excellence • • Encourage membership to recognised professional bodies Acknowledgement of related leading practices e. g. professional practices and frameworks Documented charters, internal policies and procedures/ methodologies in line with such leading practices On-going monitoring to ensure effective and efficient process Processes to ensure conformance to mandatory elements of related professional practices & frameworks as well as internal policies & procedures Periodic independent assessments of performance, conformance and value add Establishment of Key Performance Indicators to measure customer satisfaction and value add. 13
Early Warning System (EWS) IA introduced the EWS to highlight to client management the status of corrective actions to assist them to improve the percentage IA findings resolved. EWS will be expanded to other Probity branches to increase accountability for taking corrective actions to address all governance issues. • • • KPI - “Percentage internal audit findings resolved” currently measured on Directorate SDBIP 2017/2018 KPI “Percentage Probity Recommendations Implemented” was added to ED personal scorecards Quarterly reports will be submitted to each ED for reporting purposes EWS to be rolled out to the other Probity branches to report on the above indicator Envisaged that this indicator will be added to Directorate SDBIP in 2019/2020 14
Client Relationship Management (CAM) IA developed and implemented a Client Account Manager initiative, which will be rollout to other Probity branches in its quest to embrace the City’s customer-centric culture with its own internal clients • • • CAM Terms of Reference Developed CAM purpose to build and maintain relationships between Probity and its clients CAM focus is on client expectations, support, satisfaction and perceptions CAM is a senior official in Probity assigned to an ED to liaise with ED on Probity matters. CAM escalates matters of client concern to the Portfolio Manager: Probity Customer Survey issued to measure performance/ value add and identify areas of improvement 15
Integrated Reporting Probity is in the process of implementing integrated reporting to its stakeholders and clients on its various governance portfolio activities to ensure easier accessibility to information related to governance issues at the City. Probity Plans Governance Issues Early Warning System for Probity Findings and related actions Bi-Monthly Reports to ED: DOM, CM, Deputy & Executive Mayor Annual Report on Internal Controls of the City Risk Management Quarterly Reporting to EMT, the Deputy & Executive Mayor, APAC Annual Report on the Performance of Probity Internal Control Process 16
IT Capacity & Roll-Out To Staff – Short, Medium & Long Term Revised IT Audit Strategy, including the further capacitation of IT and non-IT staff with IT & on-the-job audit training and skills transfer 17
DATA ANALYTICS / CONTINUOUS AUDIT / FORENSIC ANALYTICS
Continuous Auditing The continuous audit process in comparison to the standard audit project phases:
Forensic Data Analysis • • • Forensic Data Analysis: - examines structured data; - to identify incidents of financial crime. The aim: - discover and analyse patterns of fraudulent activities; - analyze large structured data sets. The detection of financial crime requires three types of experts: a) A data analyst to perform the technical steps and write the queries, b) A team member with extensive experience in the relevant area of the processes and internal controls of the investigated company, and c) A forensic scientist who is familiar with patterns of fraudulent behaviour.
IT Risk Management
How Can You Monitor Innovation Progress? • Evolve with changing vision of the organisation • Identify Key Strategic Innovative Initiatives • Develop action plans to implement these initiatives • Nominate champions to co-ordinate and/ or take action required • Identify KPI’s to Measure success • Champion’s Provide monthly feedback on success, failure, challenges, issues, areas of improvement. • Client surveys to measure value add to client of IA’s innovation in the organisation 24
Thank You Contact: Lindiwe. [email protected] gov. za