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Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. [1]
An internal auditor is an auditor who is appointed by the Board of directors of the company in order to carry out the internal audit function. Generally, an employee of the company acts as an internal auditor, whereas some companies appoint an external expert as an internal auditor. [1]
The Charter of Audit and the reporting to an Audit Committee generally provides independence from management, the code of ethics of the company (and of the Internal Audit profession) helps give guidance on independence form suppliers, clients, third parties, etc.
Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.
Audit management oversees the internal/external audit staff, establishes audit programs, and hires and trains the appropriate audit personnel. The staff should have the necessary skills and expertise to identify inherent risks of the business and assess the overall effectiveness of controls in place relating to the company's internal controls.
Thus professional internal auditors provide independent and objective audit and consulting services focused on evaluating whether the board of directors, shareholders, stakeholders, and corporate executives have reasonable assurance that the organization's governance, risk management, and control processes are designed adequately and function ...
The Institute of Internal Auditors based its control self-assessment methodology on the Total Quality Management approaches of the 1990s as well as the COSO's framework. The methodology became part of the International Standards for Professional Practice of Internal Auditing and was adopted by a large number of major organisations. [16]
In collaboration with the audit committee, ensure that a practice inspection or other external review of the internal audit function is conducted at least every 3 years, by a qualified, independent external review team, and that the results of this external assessment are communicated to the audit committee.