Basics of Internal Audit
What is an Internal Audit?
As defined by the Institute of Internal Auditors (IIA), internal audit 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.�
Internal Auditor Characteristics Skills being sought in Internal Auditors:
Communication skills Technical skills and expertise Integrity and character Intelligence Business acumen Professional skepticism Inquisitive Self-starter IT Knowledge Personality
Internal Audit Structure Board and Audit Committee
Management
Functional Reporting
Administrative Reporting Internal Audit Executive
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Functional reporting includes approving the internal audit charter; approving the risk based internal audit plan; approving the internal audit budget and resource plan; hiring and firing of chief audit executive etc. Administrative reporting comprises day-to-day activities of the internal audit function including budgeting and management accounting.
Internal Auditor Charter Elements The internal audit charter is a formal document that defines the internal audit activity's purpose, authority and responsibility. The properly structured internal audit charter should include:
Mission and scope of the internal auditing department Accountability of the Chief Audit Executive (CAE) to management and an audit committee Independence of the internal auditing function Responsibilities of the CAE and internal auditing staff Range of authority of the CAE and internal auditing staff Applicable standards of audit practice
Internal Audit Process Schedule and plan the audit Coordinate the Audit Plan with others Select the audit team Review previous audit reports Opening meeting Conduct audit Closing meeting
Want to learn more about audit, and best practices for auditing? ComplianceOnline webinars and seminars are a great training resource. Check out the following links: Risk Based Internal Auditing (RBIA) Internal Auditing Essentials for Medical Device Manufacturers How to Audit GRC Programs? Role of the Audit Committee in Corporate Governance Internal Audit's Role in Enterprise Risk Management OCEG Approved GRC (Governance, Risk and Compliance) Professiona Auditing Technology and IT Investment Management