Leading Internal Audit and creating a new risk plan
Superior CAE Advisory services for successful risk and compliance management
A large retailer found themselves in need of assistance when their Chief Audit Executive (CAE) resigned. They desired to fill this leadership vacancy quickly as the Internal Audit department had a number of high-priority commitments with firm end dates. Facing significant pressure to complete these goals, they turned to Aventine Hill Partners for help.
Through our CAE Advisory services, we provided an Interim Director of Internal Audit. The initial scope focused on common activities such as overseeing Sarbanes-Oxley testing; financial, IT, and operational audits; and external audit assistance. As the engagement proceeded, Senior management and the Advisor agreed that developing a new risk model for the company's stores and refreshing the audit plan accordingly would create a step-change in value realized from the Internal Audit function.
The Advisor collaborated with senior management and the Internal Audit team to develop a new risk model better suited to a company with thousands of retail stores. The model provided an easier view and understanding of risks, including how to weight risk for stores. This allowed for a more cost effective 80/20 approach where scarce resources were focused on riskier stores rather than relying on a broad but shallow sampling approach. Creating the new model facilitated a deeper dialogue among senior management, the Audit Committee, and the external auditor, especially on "Black Swan" scenarios that could impact the company or even specific stores.
Even though the company was large and an existing Internal Audit team was in place, the situation required a hands-on approach. Our CAE Advisor took over daily management of the existing employees, confirming their objectives and assignments plus soliciting their input on bottlenecks. The Advisor reviewed and updated the audit plan; communicated with the external auditor on commitments; reviewed audit work papers and programs; reviewed and edited audit reports; and met with senior management on a regular basis.
With help and leadership from Aventine Hill Partners, this company was able to successfully meet all of its internal audit commitments, address issues in a timely and effective manner, and accomplish all of management’s directives. The new risk model improved senior management's and the Board's understanding of potential threats to their success and how to mitigate them. The CEO said he had never seen risk modeled in such an effective manner.
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