Module 6 Flashcards
What is internal auditing?
An independent, objective assurance and consulting activity designed to add value and improve an organisations operations
Helps accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve risk management, control and governance
Difference between internal and external audits?
Internal audits are reported within the organisation. Relates to management
External reports a publicly published and shared to shareholders
What are the key elements of an internal audit function?
Independent Measures and evaluates Within organisation Integral part of controls Service to all levels Effectiveness and efficiency
IM WISE
What are the main objectives of the internal audit function?
To provide reasonable assurance to board on adequacy of risk management and control systems
To assist all members to effectively discharge their responsibilities
The internal audit function should report to who?
The audit committee if there is one
CEO if not
Shoulder review scope of work
IAF has to be independent of operational parts
Internal auditors are not required to have what?
The same qualifications as external auditors
There are some available
CIIA
What is the general rule for the need for an internal audit?
No statutory requirement
Some entities are required under statute or due to regulatory arrangements e.g public sector
What does the UK Corporate Governance code recommend about internal audit?
Where a company has an IAF the audit committee should monitor and review
Where one does not exist, the audit committee should consider annually whether there is a need for an IAF
Why choose to have an internal audit function?
To gain assurance that the management and control of the organisation is robust
Responsibilities and relationships of internal audit to directors?
NEDs on audit committee have a duty to oversee activities of execs
IAF has a responsibility to provide the directors with objective assurance over that quality of controls exercised by management (by reporting to audit committee)
Responsibilities and relationship of internal audit to shareholders?
Provide shareholders with a degree of assurance regarding the effective operation and control of company
Responsibilities and relationships of internal audit to management?
Provide with an independent view on the quality of internal control exercised by then
Who has the responsibility of overall risk management?
The directors
What is the role of internal audit?
To challenge processes and controls and identity and respond to risks
Monitor progress to resolve issues
Assist in facilitating risk workshops designed to increase awareness
What are the types of internal audit? 11
Financial Systems Management Value for money Contract Post implementation review Investigations Inspection and quality control Compliance Follow up Culture
