Risk Based Auditing for Project and Contracts

Introduction

Modern Internal Audit functions have a key role in enabling organizations to deliver projects within cost targets, to the required quality and on time. You will develop a greater understanding of how the risk-based audit approach provides the opportunity to improve the organization's delivery of projects. Through evaluation of why projects do not achieve the desired outcome and what can be done to avoid common mistakes in project delivery, this course practically demonstrates how internal auditors are able to employ a risk-based audit approach at every stage of the project to support success. This course will also cover a range of key projects, common in the majority of organizations, to provide a deeper understanding of how to approach auditing these projects in a practical and cost-effective way. In addition, there will be an opportunity to discuss existing project concerns in a safe and professional environment.

Objectives

Upon completion of this training, delegates will be able to:

• Learn the concepts and practical application of a risk-based approach to project review
• Understand how to identify, mitigate and control project risks effectively
• Appreciate how to separate the key risks from the lesser threats
• Challenge management and sell the benefits of the proactive risk-based audit of key projects
• Establish how to effectively identify, measure, evaluate and control project risks
• Appreciate the benefits of the proactive risk-based audit of key projects
• Understand how to audit major projects, including IT projects and Joint Ventures in a practical and cost-effective way
• Apply the concepts and practical application of a risk-based audit approach to deliver project success
• Enable project delivery to time, cost and quality objectives
• Audit major projects including joint ventures with confidence
• Apply techniques to ensure that more projects meet their agreed objectives

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practice. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

• Heads of audit, audit managers, and senior auditors
• Project managers and project program managers
• Auditors responsible for undertaking project audit assignments
• Other professionals who need to understand the risks of impacting complex projects
• Managers and directors of business functions – to aid their knowledge of a risk-based audit approach to projects

Course Outline

Day 1: Understanding Risk and Project Risk: Risk Fundamentals

• Common definitions of Risk
• Gross risk/Net risk
• Upside/Downside of risk
• Risk Profile development
• The organization's risk culture
• How risk culture impacts the delivery of project
• Organizational risk appetite and the effect on project delivery
• The risk management process
• Enterprise-wide risk management
• Models of Enterprise Risk Management (ERM) - how they can contribute to effective project delivery Key roles and responsibilities in ERM
• How can an effective risk management system enable successful project delivery?

Day 2: The Challenge of Successful Project Delivery

• High profile project failures
• Why do projects keep failing?
• Eight reasons why projects (continue to) fail
• How to avoid failure – Understanding the challenge
• How to avoid failure – Learning from past mistakes
• Getting it right at the start – Five key elements for initiating successful projects

10 Common Mistakes in Project Management

• Not following an accepted methodology
• The scope is too large
• The scope keeps changing
• The timescales are unrealistic
• Absence of the appropriate skills
• Too much to do, too little time
• Making key decisions with poor information
• Spending too long on "quick wins"
• Wrong/missing roles
• Lack of project team structure and accountability

Day 3: The 10 Golden Rules of Project Risk Management

• Make risk management an integral part of the project
• Identify risks early in the project
• Communicate about risks
• Consider both threats and opportunities
• Clarify who owns each risk
• Prioritize risks
• Analyze risks
• Plan and implement risk responses- BP case study
• Use a risk register to record project risks
• Track the risks and mitigation actions

Day 4: The Risk-Based Approach: Risk Identification and Evaluation

• Effective risk identification techniques
• Risk questionnaires
• Risk and control workshops
• Scenario planning
• Bayesian networks
• Probability and impact of risk
• Effective risk measurement - Qualitative and quantitative methods
• Choosing an appropriate risk measurement methodology
• Using Monte Carlo simulations
• Risk appetite and project risk decision-making
• Evaluation and reporting of actual versus perceived controls

Key Risks to Successful Project Delivery

• Leadership and Ownership risks
• Stakeholder risks
• Project team risks
• Approach risks
• Delivery risks

Day 5: Audit of Major Projects: The Business Perspective

• Assessing the project life cycle
• Different types of construction project and their implications
• Selection of professional services providers
• Turnkey approaches
• Choice of contractor
• Principal contract terms
• Legal and regulatory requirements
• Financing the project
• Choice of methodology
• Selecting the project manager
• Selecting a contractor
• Competency and viability

Auditing Joint Ventures (JV) and Partnership Contracts

• What is the difference?
• Has each partnership/JV been risk reviewed?
• The need to identify and schedule key partnerships
• What protocol is in place?
• The effectiveness of the review mechanism
• Frequency of review by management
• Principles of managers attending partnership meetings
• Key steps in a Partnership audit

• Key steps in a JV audit

Auditing IT Projects

• Why to audit IT projects?
• Ensuring alignment between business needs and IT developments
• Types of project audit
• Use of the CoblT Framework to control the IT project
• Key risks in IT projects
• Auditing IT projects: the audit checklist