Root Cause Analysis for Internal Auditors

In an uncertain and challenging economy, organisations expect internal audit to go beyond reviewing historical activity and assessing low value transactions. Our key stakeholders require internal audit engagements that are insightful, forward looking, and go beyond simply preserving value to creating value for the organisations. As such, critical and creative thinking skills are essential characteristics of the 21st century internal auditor. Root cause analysis (RCA) helps us to employ critical and creative thinking to identify the key, underlying causes behind our internal audit findings.

As internal auditors we can use RCA to obtain clear insight on the real, underlying causes of governance, risk management and control failures. Developing a clear understanding of what has gone wrong can lead us to create and propose robust solutions to avoid similar incidents happening again. Understanding the fundamental causes means that we can help our organisations take positive action to prevent recurrence of negative outcomes and to promote business opportunities.

We can sometimes take our internal audit fieldwork and testing for granted. We do not always give testing the love and attention that we save for the report at the end, or for the terms of reference at the start of the internal audit engagement. But effective testing is vital. It can make or break the internal audit engagement. It is the testing that generates the evidence we need to deliver insight and added value. RCA can encourage us to think critically and creatively to design and deliver more dynamic tests and to persevere until we generate meaningful results.

Applying critical and creative thinking to internal audit testing through effective RCA enables us to deliver clear insight and conclusions to support our business and board leaders in enhancing governance, risk management and internal control practice.

• Theory and practice of effective root cause analysis
• Relevant elements of the IPPF relating to effective root cause analysis and testing
• Link between internal audit testing and assurance
• Relationship between organisational culture and root causes
• Benefits of effective root cause analysis
• Six step framework for conducting root cause analysis
• Need for effective testing as the golden thread from audit remit to reporting
• Most effective root cause analysis testing, tools and techniques - including Five ?Whys, Fishbone diagrams and Logic Trees
• Challenges with root cause analysis to avoid in practice
• Best way of obtaining sufficient, reliable evidence from root cause analysis
• Use of RCA in developing effective evidence-based conclusions

Module 1: An Introduction to Root Cause Analysis

• A short introduction to root cause analysis
• Root cause analysis definitions
• Interactive group exercise - Which was caused by?
• The IIA's International Professional Practices Framework and root ?cause analysis
• Implementation Guide 2320
• The link between internal audit testing and assurance

Module 2: Context and our root cause experiences to date

• The relationship between organisational culture and root causes
• Interactive group exercise - The likely benefits to internal audit of ?employing root cause analysis
• Key root cause analysis terms and theory
• Interactive group exercise - root causes in practice

Module 3: A six step framework for conducting root cause analysis

• 1 - Defining the issue or problem
• 2 - Research, data and information gathering
• 3 - Creative thinking to Identify possible causal factors
• 4 - Critical thinking to Identify the key root causes and solutions
• 5 - Effective recommendations and implementing solutions
• 6 - Monitoring progress and formal follow up
• Interactive group exercise - Critical thinking and root causes

Module 4: Effective root cause analysis testing, tools and techniques Part 1

• The purpose, importance and place of testing within our internal audit process
• Effective testing - the golden thread from audit remit to reporting
• Interactive group exercise - The adequacy of controls
• The Five Whys - Theory and practice
• Interactive group exercise - Putting the Five Whys into use
• Fishbone Analysis - Theory and practice

Module 5: Effective root cause analysis testing, tools and techniques Part 2

• Interactive group exercise - Practical Fishbone Analysis in practice
• Tree, logic or Process Trees - Theory and practice
• Fault Tree Analysis - Theory and practice
• Successful Root Cause Analysis - Top tips for getting best results
• Interactive group exercise - An internal audit root cause example

Module 6: Challenges with root cause analysis to avoid in practice

• Common challenges associated with root cause analysis
• Overcoming these common challenges
• Interactive group exercise - Have we got to the root cause yet?
• Knowing when enough evidence is enough
• Interactive Group exercise - An internal audit root cause example

Module 7: Delivering insight through effective evidence-based conclusions

• Delivering insight
• Interactive Group exercise - Insightful Mind Mapping
• Developing effective evidence-based conclusions
• Interactive Group exercise - case study and practical exercise

Module 8: Bringing it all to an effective conclusion

• Interactive Group exercise - case study and practical exercise (continued)
• Short video, summarising the world of root cause analysis
• Questions, observations, comments and recap of day two

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