Module 5 Flashcards
Internal auditing
Independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations
Internal audit function exists for one of three reasons
- Statutory requirement
- Regulatory requirement
- Management requirement
Regulatory requirements 3 sources
- Committee of Public Accounts
- Directives by Secretary of State
- Recommendations from public investigations
Management requirement
Set up by the board to gain assurance that management and control of the organisation is robust
Board requires assurance that
Risk management procedures and internal controls are effective, if gaps are identified these should be addressed
Audit committee > if internal audit function
Monitor and review effectiveness
Audit committee > if no internal audit function
Should consider whether there is a need for one
Effectiveness of internal audit acronym
PARISS
P >
Process
Internal audit plan (overall strategy) should include (4)
- Risk analysis
- Resource availability
- Management concerns
- External audit concerns
Process stages (4)
1) Plan collated into audit strategy memorandum
2) Fieldwork - samples, CAATs etc
3) Work adequately documented and reviewed
4) Findings and conclusions agreed with appropriate members of staff before released to management
Reporting format (4)
- Description of finding or weakness
- Effect (impact) of finding
- Recommendation for improvement
Followed by management comment - whether they accept and time frame for implementation
Internal audit reports distributed to (4)
- Auditees
- Senior members of organisation
- Audit committee
- External audit
Follow up actions
Final step to ensure remedial action is taken. IA should indicate importance and urgency. Can perform follow up audit to verify action has been taken if necessary
A >
(Role of) Audit Committee
