Risk management of the internal audit function

Article Abstract:

The Du Pont Company began reviewing its internal auditing practice in 1984 to identify and assign priorities to internal control risks, and schedule and staff internal audits efficiently worldwide. The review project consequently consisted of two project teams: one to assess risk, and the other to allocate auditing resources. The teams identified seven internal audit categories by business system: revenues, payables, inventories, cash, financial reporting, payroll (including benefits), and investments. A compilation of audit categories and company locations yielded the worldwide total internal audit areas for Du Pont. To assign auditing priorities to each area, the team next considered: previous internal audit results; the sensitivity of the audit area to risk; the control procedures implemented within each area; the ability of management in each area; recent changes throughout all areas; the complexity of the operations in each area; the physical size (and staffing level) of each audit area; and the time elapsed since the most recent audit of each area. The priorities assigned were then compared to corporate management's perception of each area's operational problems, using a five-point scale. These comparisons provided internal auditors with information as to: which company operations to audit, which areas to audit first, how frequently audits should be conducted, how many people to assign to each audit, and how thorough each audit should be. The entire process is referred to by the company as the Du Pont Audit Risk Model, first used in 1986.

Case studies, Accounting and auditing, Risk management, E.I. du Pont de Nemours and Co., Internal auditing, DD, Controllership

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Survey: ethics in corporate America

Article Abstract:

A survey of management accountants holding positions ranging from senior management to staff level in companies with a net worth between less than $5 million to more than $100 million has revealed that, despite making significant progress in establishing business codes of conduct, corporate America must make additional progress if the goal of widespread codification of ethical conduct is to be achieved. The survey responses indicated that 44% of the companies in the sample did not have codes of ethical conduct and do not have plans to establish a code. Of the companies with codes, 30% do not include provisions for dealing with infractions, and 43% of the employees covered by codes do not have copies of their codes.

Analysis, Laws, regulations and rules, Surveys, Business enterprises, Business ethics, Work rules

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Postauditing capital projects: are you in step with the competition

Article Abstract:

Companies increasingly are implementing postaudits of their capital projects in order to gain a competitive edge. A survey of 282 large companies was conducted to ascertain how many firms were conducting postaudits of capital projects and their reasons for doing so. The survey results revealed that postaudits are conducted for four major reasons: to serve as a key financial control mechanism; to uncover information of relevance to future capital project decisions; to alleviate political and/or psychological barriers related to asset control and abandonment; and to impress on management their responsibility when proposing capital projects investments.

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