What is Internal Auditing?

 

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.

 

 

The Internal Auditor’s responsibilities with respect to the internal audit function. The Internal Auditor describes audit planning and scheduling, and discusses, the internal audit function may be provided by in-house staff or an outsourced team. Whether internal audit is a part of the organization or not its structure would depend on:

 

Business of the organization

Geographical locations

Culture of the organization

Control risks

Environment

 

 

Scope of Internal Audits

 

The internal audit function’s scope of operations is by its very nature quite expansive. The internal audit function will assist the College in fulfilling its vision, mission, strategic initiatives, and objectives, while adhering to its core values, by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of enterprise-wide risk management, internal control systems, and governance processes.

 

Ultimately, the internal audit function will help ensure:

 

Risks are identified and managed properly;

Significant financial, managerial, and operating information is accurate, reliable, and timely;

Employees’ actions are in compliance with, standards, procedures, and applicable laws and regulations;

 

acquired economically, used efficiently, and adequately safeguarded;

Internal controls, good business judgment, and high ethical standards;

Quality and continuous improvement are fostered in the internal control processes; and

Significant legislative or regulatory issues impacting the addressed appropriately.

 

 

Effectiveness of internal audit function

 

The audit committee should annually assess the effectiveness of the internal Audit function. Internal audit should be assessed against the following Criteria:

 

I. Achievement of the annual internal audit plan;

ii. Compliance with IIA’s professional standards inclusive of quality assurance assessments on the level of compliance achieved;

iii. Achievement of reporting protocols through management to the audit committee;

iv. Timeliness of reporting of findings and activities;

v. Responsiveness to changing business/operational environment;

vi. Management’s acceptance of the internal audit findings;

vii. Quality and relevance of the annual assessment reports;

VIII. The level of cooperation and communication with other providers of quality combined with an agreed approach to quality assurance;

ix. Maintenance of adequate staffing/sourcing levels to achieve the required to meet the requirements of this charter; and

x. Meeting the budget allocated to internal audit.

Types of Audits

 

Departmental Audits

Financial Audits

Operational Audits

Grant and Contract Audits

Fraud and Financial Irregularity Audits

Follow-up Audits

 

Internal Audit Procedures and Techniques

 

 

1. Observation and Inquiry

2. Analysis and Review

3. Inspection

 

I. Vouching

II. Recompilation

III. Retracing of Bookkeeping Procedures

IV. Physical Examination and Count

4th Confirming

 

Overview of the Charter

 

The Charter must be at least once a year, can be updated more frequently if circumstances so require. It was approved by the Council and approved by the audit committee under the authority of internal audit

 

 


Article Source:China Sourcing Blog

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