What is Internal Audit?

Put simply, an internal auditor is someone who works with the management of an organisation, either as an employee of that organisation or as an independent contractor to determine the most cost effective and efficient way to do things whilst managing risks appropriately. So, an internal auditor will review the systems and processes in operation within an organisation providing an opinion on the ways in which risks within those systems and processes are managed and making recommendations for improvement. An internal auditor works with the organisation on a continuous basis throughout the year covering a broad spectrum of the organisation’s activities through an annual programme of reviews. 

In many sectors, the internal auditor is required to provide an annual opinion on the adequacy and effectiveness of the system of risk management and internal control. In any one year an internal auditor could look at the way the organisation manages its recruitment, training and development of its staff, deals with creditors and debtors, undertakes its strategic and business planning, appoints contractors, manages stock, deals with demand for its product and/or services – so it much more than just finance.

We provide outsourced Internal Audit for regulated public and private sector entities, so we are often required to tender for work. 

The benefit of having a practising certificate from my perspective is that procurement people buying Internal Audit tend not to understand what Internal Audit is and ask the same questions in the tender whether it’s external audit or Internal Audit (even though the former is regulated and the later isn’t). So there will often be a question asking whether I have a practising certificate and I can say that I do, whilst not necessarily needing one for unregulated work, not wasting time explaining why I don’t need one, and differentiating ourselves.  

I graduated in Business & Accountancy and initially sought roles as an accountant; however, one particular role was already filled, and the in-house recruiter asked if he could pass my CV along to a friend. After a rather grilling recruitment process so began my life as an internal auditor (secretly thinking “What’s one of them!?”) with a FTSE multinational company.  

I now work for an independent firm within the Haines Watts group. When I became a director of the company, the Group’s Head of Compliance advised that I should have a practising certificate. That was news to me – before that, nobody had said that I would need a certificate! I was surprised that I would need a practising certificate since Internal Audit is an unregulated business, but the policy of our Compliance team is that all of our partners/directors should have practising certificates even though my Internal Audit firm doesn’t do any accountancy work. 

Many of the questions in the Practising Certificate Experience Form (PCEF) felt to me to be aimed at people in public practice accountancy. Given that my entire working life has been in Internal Audit and none of it has been in practice, I found it a real challenge to demonstrate my competencies. I had to frame my responses in the context of having audited the systems of client companies and advised upon them. There were numerous questions where I had to reflect on what I was doing and shoehorn it in to address the question.

Part 1 of the PCEF is more around practice management – the business of being in practice which is similar be it internal or external. Those sections were relatively easy. Part 2 of the PCEF - the optional units - were more problematic for me because you need to provide specific examples of work and the advice that you’re giving. For example, one of the areas is about identifying potential changes to an organisation’s accounting systems – I could only write about that from an auditing perspective and say that I’ve audited a company’s systems and identified improvements to them. 

The examples provided within the guidance notes were for people in practice and industry so were not helpful for me because I’m in Internal Audit. The majority of what I do has nothing to do with accountancy. At least in industry if you’re in a finance department then you’re dealing with financial transactions, financial controls and management information, but I’m not in that sphere and I’m doing something completely different. So I filled in the form on the basis of the way the client company is audited and what I do internally within the business. 

Make sure that you open the PDF of the form in Adobe PDF – that’s the only way that you can edit and save them. PDF documents will open in say Chrome or Microsoft Explorer and you can type in them but then you won’t be able to save them, and you’ll lose all your work. 

In total it took me four attempts to get my practising certificate application approved – did I set a record? 

You have to write your responses in a particular way but ACCA’s Authorisation team was helpful in the to-ing and fro-ing explaining how I needed to answer the question to be successful. You can see an example of my first draft for Area B - Element SR5 (Agree service details and engage clients under Stakeholder relationship management) and the draft that was finally accepted; in my mind there is little difference, other than the inclusion of example service standards, which will vary from client to client, the process you follow to agree those standards is the part which remains similar and actually the focus of the question.

As I had no idea that I would ever need a practising certificate, I hadn’t prepared or completed the PCEF as I’d gone along, and my six-monthly performance appraisals were never done with that in mind. Completing the form retrospectively is very difficult so I’d recommend finding out if you might ever need a practising certificate and then ensuring that your six-monthly review process incorporates the evidencing for your practising certificate. Fortunately, I’d been in the same company for years with the same director and he was still there and able to sign off the PCEFs.

One aspect I was uncomfortable with was the achievement dates. Because I was completing the forms retrospectively, I could not be certain when I had demonstrated my competency, much of what I was writing about I have been doing for many years and therefore was second nature, but I had to relate the experience to the timeline of the application.  I felt that the achievement dates for each section should therefore be the date that I was completing the form. However, the forms needed to reflect gradual progression in my development and so ACCA's Authorisation team advised that the dates should be throughout the period of post membership experience being documented within the form - it accepts six-monthly end dates as achievement dates as it understands that some members complete their forms retrospectively. The internal auditor in me is still not comfortable that my forms were not 100% accurate!

Top tip: You don't have to take up a practising certificate once your Practising Certificate Experience Form is approved - you can bank the experience until you need to apply for your practising certificate.