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Integrated Assurance Project is a PETRONAS Groupwide initiative as part of Project CACTUS
In 2016, Project CACTUS Lab#4 Integrated Assurance had been established as a spin off from CACTUS Project’s Cost efficiency and Process Simplification Work stream and PETRONAS Integrated Assurance Framework were agreed by ELT in Aug 2016.
Integrated Assurance Project (IAP) has been established to provide new ways in conducting assurance at all levels through a structured and consistent approach in which internal controls are documented and periodically evaluated for effectiveness
The simplification and standardization of processes is conducted through each assurance processes through elimination of redundancy and duplication and; strengthening the ownership & accountabilities at operating levels.
Redundancy and duplications for improvement were identified
Reduce Remove Enhance Introduce
Business Assurance Functions
Functional Checklist
Tiering Process(Tier 1, 2 & 3)
Key Assurance Process
Redundant Process Governance
Document
Line of Assurance
Oversight & Line of Sight
Single Masterplan
“Gemba Walk” exercise & Value Creation Processes to simplify and standardize processes towards value assurance
51% improvement of assurance process from 65 assurance steps to 32 assurance steps via digital system
Reduce 235,000 man-hours (33%) for assurance programs from corporate and business. 300 programs reduced to 100 program a year.
RM43mil cost saving derived from overhead costs reduction for assurance programs and reduction of man-hours for assurance programs from corporate and business
1.9% improvement of active work hours at operating unit by reducing hours spent for audit from 4.5% to 2.7%
The overall benefits is anchored to six focused areas of CACTUS to evaluate its ROI
• 51% improvement of assurance process from 65 assurance steps to 32 assurance steps via digital system
• Reduce 235,000 man-hours (33%) for assurance programs from corporate and business. 300 programs reduced to 100 program a year.
• RM43 mil cost saving derived from overhead costs reduction for assurance programs and reduction of man-hours for assurance programs from corporate and business
• 1.9% improvement of active work hours at operating unit by reducing hours spent for audit from 4.5% to 2.7%
• Reduction of reported operational issues
CostHow to optimize cost?
How to simply processes?
CashHow to increase profit and
generate more cash?
TalentHow to identify and develop
talent?How to develop yourself and
further improve?
TechnologyHow do we be more
innovative and creative in delivering our work?
CultureHow to create better day
to day experience?
ProjectHow to deliver focused
execution?
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• Standardization of assurance processacross Corporate & Business
• Integrated Assurance Planning eliminate duplication and overlapping
• Consistent implementation of assurance programs at Corporate and Business levels
• Clear accountabilities and responsibilities to deliver ownership for compliance at site
• Digital technology to simply and facilitate the assurance processes and provide oversight via intelligent and real time performance visualization on effectiveness of internal controls.
• Upskill people towards effective implementation of assurance programs at Corporate and OPU/Asset/Country.
• Inculcate compliance culture through assurance process and ownership
• Compliance to governance requirement and assurance activities providing check and balance towards delivering superior performance assets
Notes : 1) Finance is to be managed via GRC system. 2) For upstream activities in Malaysia, 2nd line assurance will be conducted in Malaysia Petroleum Management (MPM)3) Source : IA Corporate Governance as of 5/2/2018
Integrated Assurance Project involves all the Assurance Providers responsible for the 12 applicable focused risk areas as per the PETRONAS Resiliency Model
Human Capital ICT Security Reputation Strategy & Portfolio Country
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Presenter
Presentation Notes
These are the SUBJECT MATTERS in their respective risk areas – these people develop the framework and guideline on how to manage risks in their area. These groups will set the tone for PETRONAS in terms of policy, mgmt. system, framework to operating units. (Level 1 and Level 2 documents)
A structured assurance approach based on three (3) lines of assurance that play distinct roles to ensure that the risks and internal controls are effectively managed at all levels within PETRONAS.
Three (3) Lines of Assurance is introduced for PETRONAS Assurance Programs
Ass
ura
nce
Au
dit
Regulators
External Audit
Internal Audit
Assurance vs. Audit levels within PETRONAS Assurance Programs
Regulators
External Audit
Third Line of Assurance
Second Line of Assurance
First Line of Assurance
Corporate
Business Unit
Asset/Country/OPUs
You are here!
Self Assurance
Empowerment
AUDITEvaluating and Investigating
Aspects of Your Organization
ASSURANCE
Building Confidence by Examining the
Credibility of Information
Source: I.S Partners website
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Presenter
Presentation Notes
Three (3) Lines of Assurance is introduced for PETRONAS Assurance Programs. It will be the anchor for all audit process in PETRONAS. No more Tier 1, 2, 3. ASSURANCE: Things that are within our control. The difference between the current and the new assurance will be: The current process is: Limited to HSE Assurance & specific assurance program by key corporate units Has 4 assurance stages Does not adopt COSO HSE Checklist only This new 3 Lines of Assurance will be: All Corporate Assurance based on Corporate Assurance programs Has 5 assurance stages inline with Internal Auditor Process COSO adoption All governance checklists ( All 19 governance areas)
The new assurance process provides more ownership and accountabilities at OPU to drive self assurance programs using a structured approach for a better line of sight and oversight for effective informed decisions.
Key differences of current and future assurance process in PETRONAS
Tier 3Corporate
(1 year to 5 years)
Tier 2BU
Min. annually
Tier 1OPU
Min. Quarterly
Risk Based Assurance
Management System
Effectiveness
Operational Assurance(Checklist)
Report to Corporate &
Plant Management
Report to BU & Plant
management
Report to Plant
Management
AssuranceCorporate
(3 years to 5 years)
Self AssuranceOperating Unit
Risk Based Assurance
MS & Functional Checklist
Report to IA, PETRONAS LT,
Corporate, BU & OPU
Report to Own Management &
Oversight to BU & Corporate
Ratings Opinion Ratings
GOOD FAIRUNSATISFACT
ORYUNACCEPTA
BLE EFFECTIVESOME
IMPROVEMENT NEEDED
MAJOR IMPROVEMENT
NEEDED
Current New Assurance
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Presentation Notes
Current Limited to HSE Assurance & specific assurance program by key corporate units 4 assurance stages Non COSO adoption HSE Checklist New Assurance All Corporate Assurance based on Corporate Assurance programs 5 assurance stages inline with Internal Auditor Process COSO adoption All governance checklists ( All 19 governance areas)
Third Line Assurance is the internal audit function that provides an independent, objective assurance and consulting activity designed to add value and improve the businesses’ operations.
Third Line Assurance
• Report on and provide independent assurance on the adequacy and effectiveness governance, risk management and internal controls
5 key processes to govern assurance activities at all lines of assurance
Integrated Assurance Processes
• Integrated Planning
• 1+4 years Masterplan
• Risk Based Strategy for Second & Third Line Assurance
• Assurance Preparation
• Assurance Plan Memorandum
• Resource allocations prior to assurance fieldwork
• Assurance field work at site
• Validation and verification of system adequacy & effectiveness
• Assurance Report preparation and issuance
• Assurance findings and action items monitoring & tracking
• Closure of action items
Assurance Annual
Planning
1Assurance Planning
2Assurance Fieldwork
3Assurance Reporting
4Post
Assurance & Monitoring
5
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Presentation Notes
The assurance process has been reviewed and standardized. PETRONAS Integrated Assurance will be governed by these 5 key processes. Annual Assurance Planning – regional will make the master plan for 1+4 years Assurance Planning – who will be conducting assurance and when. Assurance planning memorandum preparation before you conduct actual assurance. Assurance Fieldwork – going to site, verifying documents Assurance Reporting – Prepare report based on assurance conducted. Post Assurance & Monitoring – Closure
Line of Sight for better reporting and transparency of assurance performance.
President(Incl. President Office)
SVP/EVP Levels
EVPs Business Units
Head of OPU(Business Sector/Assets)
Head of Plant/Assets
Respective Divisions/Department/Sec
Working Levels (Executive & Non Exec.)
Co
rpo
rate
Le
vel
Bu
sin
ess
Leve
lO
per
atin
g U
nit
Lev
el
Corporate by Focus Area (GHSE)
Open i/p Overdue Closed
Total HSE Action Item Status
Non Compliance
Trend
2013 2014 2015 2016 2017
Overdue Items
121
321
89
265
Business Level
Open
i/p Overdue Closed
All Department Status
Non Compliance
Trend
2013 2014 2015 2016 2017
Overdue Items
523
678
462
762
OPU Head & Management
Open i/p Overdue Closed
All Department Status
Non Compliance
Trend
2013 2014 2015 2016 2017
Overdue Items
52
23
41
93
myASSURANCE will provide transparency of assurance
performance based on Limit of Authority (LOA) for better
decision making
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Presentation Notes
Working Levels – conduct self assurance The report will go to Respective Divisions (how many actions items – open or in progress) The performance will be transparent to the management
myAssurance is a web-based platform using a cloud system which provide ultimate accessibility to all assets in PETRONAS via desktop and mobile devices.
myASSURANCE is a single digital platform for all audit and assurance in PETRONAS
Key Milestones of project deliverables prior to full implementation of Integrated Assurance in 2019
Full Commitment & Supports from OPU for a smooth implementation of integrated assurance
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WE ARE HERE!
Presenter
Presentation Notes
We are in the month of May. myASSURANCE pilot version is implemented at a few locations for the purpose of gathering feedback and testing. Training for Integrated Assurance and myASSURANCE will happen from June till the end of the year For now, the IA roadshow will tour Malaysia at a few locations to create IA awareness To ensure the success of this project, everyone must play their role. Attend training to understand and learn more!