On the Frontlines: Move Ahead with an EQA

If you are a CAE, your job involves focusing on the risks within the audit universe and allocating your resources to provide insights on the effectiveness and efficiency of the operations under review. You and your internal audit team are likely doing a good job of helping your organization achieve its objectives through your assessments and insights on how governance, risk management, and controls can be further enhanced. Perhaps the board and management are happy with your work, as reflected in your engagement reports and quarterly and annual progress reports.

To ensure that your work is optimized, an important next step is to invite an objective, knowledgeable third party to assess the function itself, providing insight into how well you and your team are performing compared to the requirements of the Global Internal Audit Standards. That external outsider’s evaluation of your activities and performance is what is referred to as the External Quality Assessment (EQA).

Both the new and old Standards require that every internal audit function have an EQA at least once every five years. EQAs provide an objective assessment of the function's effectiveness and efficiency and can help identify areas for improvement.

Why go for it?

If your organization has not yet undertaken this assessment, here are some benefits to consider:

• EQAs provide an unbiased evaluation of the internal audit function. External assessors are independent professionals with extensive experience in auditing and risk management. According to the new Global Internal Audit Standards, at least one member of the external quality team also must be a Certified Internal Auditor. As such, they can provide a fresh perspective on the internal audit function's operations and identify areas that may be overlooked or underemphasized. This is particularly important for identifying blind spots that may exist within the function, such as gaps in risk management or areas where internal auditors may lack expertise.

• EQAs help to ensure that the internal audit function is complying with industry standards and regulations. External assessors must be well-versed in the standards and leading internal audit practices. By conducting an EQA, external assessors can evaluate the internal audit function's performance and its compliance with these standards and provide guidance on areas that may need improvement. Keep in mind that the new Global Internal Audit Standards will go into effect on Jan. 9, 2025. An EQA conducted after this date will assess the internal audit function against the new Standards, so, it is important to ensure your function understands and is working to conform to the new Standards.

• EQAs can help to increase the internal audit function's credibility and reputation. When an internal audit function undergoes an EQA, it demonstrates a commitment to best practices and a willingness to be held accountable for its operations. This can help to build trust with stakeholders and increase confidence in the function's ability to provide objective and independent assurance. 
• EQAs provide an opportunity for continuous improvement. By identifying areas for improvement, an EQA can help the internal audit function to refine its processes, enhance its risk management capabilities, and improve the overall quality of its work. This can ultimately lead to increased effectiveness and efficiency, as well as better alignment with the organization's strategic objectives.

What are the deliverables?

An EQA provides your audit function with a comprehensive report that evaluates all your processes, systems, and documents and offers a wealth of insights on how to take your internal audit function to the next level. With the outputs from this report, you will be able to develop a roadmap and even use this as your input for developing a strategic plan. Not only will the EQA report provide your internal audit function with an analysis of its strengths, weaknesses, opportunities, and threats (SWOT), but it will also clearly provide your team with the needed guidance and criteria to further improve and mature.

Having led numerous teams that have conducted EQAs across Africa, Asia, and the Pacific, I can confidently say that all internal audit functions that have undertaken this “soul-searching” deep dive and implemented the EQA recommendations are in a stronger position and providing much greater value to their stakeholders.

As the CAE, having conducted an EQA gives you the right to walk with your head held high, knowing that your peers have given your work the recognition that it deserves.

Register for The IIA’s webinar, “What the New Standards Mean to Quality Assessments,” taking place Feb.13.