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WHY Do a Quality Assessment Review? The Gold Standard Set by the IIA

A Quality Assessment Review (or known as a “QAR”) is a comprehensive review of the overall effectiveness of an internal audit function. Internal audit professionals think a QAR is the best way to see the “reflection in the mirror.” It assesses compliance with professional standards; the effectiveness and efficiency of function activities; organization, resource and skill capabilities; and the evaluation and fulfillment of stakeholder needs. It also identifies strengths and improvement opportunities that strategically position the internal audit function for ongoing success.

One danger of not implementing a QAR is the assumption that the Chief Audit Executive is meeting their job description, when they are actually missing the broader objectives of why they are in existence. For example, if an Audit Executive’s main objective is to run an Internal Audit Department solely to meet compliance; that may seemvery good – meaning that they are meeting a certain job description handed to them by the Audit Committee. But the reality is that Internal Audit Department’s main objective isn’t supposed to be solely a “compliance” officer, but rather management’s go-to advisor to help the company meet its business objectives. In that regard, they’re supposed to play a key influential role and be a valued team member of the company.

Internal Audit Departments seen as “Compliance Shops” pose a real risk of missing the mark. What’s that mark? Internal Audit Departments need to meet their main objective which is to be a support system for management – and meeting the company’s larger business objectives. A QAR forces an Internal Audit Department to stop and take that hard look in the mirror by asking themselves these thought provoking questions: What is the gold standard? How is the department as a whole doing, compared to what the IIA says we should be doing? It also gives staff members an objective benchmark that they trust. Most employees’ reviews and performance evaluations are based on a supervisor telling them, “Hey you did a good job. You did what you were told,” but they don’t realize what benchmark is out there in terms of international standards.

Many people see the QAR as a great game changer in terms to their performance and feeling like they’re adding value to an organization. So from the perspective of the internal audit staff, they definitely see the value in an independent person coming in and reviewing how well their company is being run. They can feel confident that they’re being benchmarked against the gold standard and know what areas they’re doing well in, and what areas need a closer focus or new approach.

The QAR is a process to move your internal audit department in the direction where it should be to meet that gold standard. At the end of a QAR, the company gets a written report that spells out some of the technical issues, but what it really provides is: Here is where you are today, and here is where you should be tomorrow. What’s been so surprising over the years of the internal audit profession is when a QAR is done, hidden gems or “ah-ha” moments are highlighted and shared with the entire internal audit staff, making it more rewarding to work in an organization that cares enough to take a hard look into that mirror and become better.

Validating the strategic value of an internal audit group from an outside party is invaluable. While companies are given the option to start the project in-house, and once they get to that final stage, hire an independent person to evaluate it – the reality is that the perceived value is less. Everyone involved knows the difference when they hire someone from soup to nuts to start the QAR, that it is truly an independent and objective quality assessment and that the results are the results.