Module 6 Internal audit Flashcards
What are the differences between internal auditors and external auditors?
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
What is internal audit?
Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organisations operations
What are the key elements of an internal audit function?
Independent from day to day operations of the business
Objectively measures and evaluates
Takes place within the organisation
An integral part of the framework of business controls
It is a service to all levels of the organisation
looks at the effectiveness as well as the efficiency of operations
Do internal auditors need the same qualification as external auditors?
No, although internal auditors can join the Chartered Institute of internal auditors
Who does the internal audit team report to?
The audit commitee otherwise it is the CEO
Is Internal audit a statutory requirement?
No, although some entities are required to have an internal audit function, common requirement of public sector
Why does businesses choose to have internal audit?
To gain assurance that the management and control of the organisation is robust
What are the different types of internal audit?
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
What makes an internal audit effective?
PARISS
Having an internal audit process The role of the audit committee Resource and competence Independence Position and status of internal audit Internal auditing standards
