Alcoa has an established, independent, and global Internal Audit Department (IAD). The group’s focus is to assess risk across the company, apply audit resources to address those risks, and develop recommendations to close any gaps that are detected as a result of an audit.
The IAD conducts audits in the following discipline areas at all Alcoa locations:
- Health & safety;
- Financial & business processes; and
- Information technology.
IAD uses an audit risk model to aid in its planning. This model incorporates critical risk factors—both quantitative and qualitative—for all audit disciplines. Both inherent risk factors (location size, operating process hazards, etc.) and level of control factors (prior audit results, business or process change, etc.) are used to establish a risk profile by discipline area for each auditable entity in Alcoa.
Examples of risk factors used in the model include the following:
- Prior audit score;
- Change in key personnel or process;
- Comparison of actual to planned results;
- Incident/injury rates; and
- Key financial metrics.
The risk assessment places each auditable entity in order of highest to lowest risk. The audit plan is developed based on the risk assessment and established baseline for audit frequency. The depth of audit coverage for each entity is also determined based on risk, allowing for increased focus on higher risk areas and adjustments in audit team size and coverage, where appropriate.
IAD is required to review every auditable entity at least once every five years, regardless of risk level. Entities with unsatisfactory audits, provisional and marginal audits, or scores of less than Good in Health and Safety critical objectives are re-audited within one year.
IAD is also charged with implementing the Alcoa Self Assessment Tool, a type of self-audit that is required to be performed by every Alcoa location or administrative process worldwide. Self assessments are required annually for financial, information technology, and operational excellence areas, as well as certain critical matters in the environmental and health and safety areas.
- Alcoa Global Audit aspires to achieve world-class audit excellence by demonstrating the highest level of integrity and ethics, providing value-added audit services, providing a timely and accurate assessment of Alcoa’s business risks, eliminating differences between our practices and world excellence, and setting the standard for the best audit function in the world.
- Audit will recruit and develop individuals from diverse backgrounds to perform audits fairly and objectively utilizing the most effective auditing tools, techniques, and technology.
- Audit will deploy resources focusing on the risks and exposures that have the greatest impact to the organization and the highest level of management attention.
- Audit will partner with management to promote self assessment and best practice sharing to achieve operational improvement and internal control effectiveness.
- Audit will foster and maintain a strong, professional relationship with our external auditors.