Leveraging the Third Line of Defense for internal audit execution
19 August 2015
The Three Lines of Defense model has been utilised by many organisations worldwide to define specific duties related to risk and control. Directors and management are faced with establishing critical differences in roles and responsibilities of their staff and how the relevant duties should be effectively assigned to them in order to achieve their objectives. The model helps organisations to differentiate between assurance and monitoring activities, particularly those which cannot be clearly defined.
In our article last week we talked about 10 essentials of internal audit and how the Three Lines of Defense Model provides a powerful methodology for successfully assigning and handling risk management and control responsibilities. Today’s article focuses on audit as the third line of defense and how organizations can leverage it to achieve their GRC objectives.
The Institute of Internal Auditors (The IIA) describes internal auditing as an “independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organisation accomplish its objectives by bringing systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”
As a third line of defense, internal audit is characterised by its high level of organisational independence and objectivity. Most organisations also have their internal audit independence further strengthened by a direct reporting relationship between the chief audit executive (CAE) and the board of directors. This high level of organisational independence and optimal positioning within an organisation enables internal auditors to provide reliable and objective assurance to the board of directors and senior management regarding governance, risk and control.
By actively contributing to effective organisational governance, internal auditors constitute an integral part of every Three Lines of Defense model. Thus, establishing an integral audit activity should be a priority for every organisation subject to high regulatory standards.
Ideagen have been supplying software to organizations worldwide to optimize audit productivity, ensure compliance and provide excellent management information. Its leading internal audit and risk management software, Pentana, is the result of 25 years of supporting internal audit departments around the world. With a global network of internal audit management software specialists we continue to provide the best of breed systems that enable companies and public bodies to utilise the third line of defense in the most efficient way possible. Our global operations have very much a local approach to every organisation and its objectives so we always ensure that our efforts and support are tailored to the specific requirements of each business.
10 key benefits:
- Integrated, ready to use risk and control frameworks;
- Greatly improved efficiency of preparing and issuing audit reports;
- Increased visibility of audit progress, risk levels and control coverage;
- Implementation of a consistent auditing methodology;
- Vastly reduced administration overheads for audit managers;
- Easy reporting on historical audits to inform future work;
- Driving quality throughout the audit process and audit team;
- Reduced wastage and duplication of effort;
- Latest proven Microsoft technologies
- Safeguarding company assets through stronger corporate governance.
Jennifer Greig
Jennifer is an Internal Audit Specialist at Ideagen and a key member of the Audit, Risk and Compliance team. Supporting Internal Audit Teams across Europe, Jennifer has helped many organisations mitigate risk, streamline their processes, and create operational efficiencies.
Jennifer specialises in the financial sector however her unique skill set means that she can effectively support all sectors.