Module 6 Internal Audit Flashcards

1
Q

What are the differences between internal auditors and external auditors?

A

Internal auditors reporting lines are within the organisation: external auditors report to shareholders

Internal auditors normally audit internal subject matters: external auditors report publically on the published financial statements

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2
Q

What is internal audit?

A

Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organisations operations

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3
Q

What are the key elements of an internal audit function? IM WISE

A
  • Independent from day to day operations of the business
  • Measures and evaluates objectivly
  • Within the organisation
  • Integral part of the framework of business controls
  • Service to all levels of the organisation
  • Effectiveness as well as the efficiency of operations
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4
Q

Do internal auditors need the same qualification as external auditors?

A

No, although internal auditors can join the Chartered Institute of internal auditors

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5
Q

Who does the internal audit team report to?

A

The audit commitee otherwise it is the CEO

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6
Q

Is Internal audit a statutory requirement?

A

No, although some entities are required to have an internal audit function, common in public sector bodies

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7
Q

Why does businesses choose to have internal audit?

A

To gain assurance that the management and control of the organisation is robust

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8
Q

What are the different types of internal audit?

A

Financial audit - checks financial statements

Systems audit - review the systems that regulates and controls its activities

Management audit - evaluates and appraises the processes and policies management of the organisation

Value for money audit

Contract Audit - review high value and high risk contracts

Operational audit - systematic review and evaluation of an organisation

Post implementation review - objective appraisal of the success or otherwise of a business initiative

Investigatins - internal or external fraud, operational losses, breaches of security or concerns towards management

Inspection and quality control

Compliance Audit - review adherence to particular laws and regulations

Follow up audit - audits conducted after an internal or external audit report has been issued

Culture Audit

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9
Q

What makes an internal audit effective? PARISS

A
  • Internal audit process
  • The role of the audit committee
  • Resource and competence
  • Independence
  • Position and status of internal audit
  • Internal auditing standards
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10
Q

How can an organistion ensure independence of the IAF?

A
  • IAF report directly to the audit committee
  • Internal audit plan approved by the audit committee
  • Audit committee appoint the internal audit manager
  • Remunerating internal audit staff to support independence
  • Internal audit staff are not invovled in operational areas
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