Internal Audit Current Issue
8.0 Background
According to Wikipedia, Internal auditing is a profession and activity involved in helping organizations achieve their stated objectives. It does this by using a systematic methodology for analyzing business processes, procedures and activities with the goal of highlighting organizational problems and recommending solutions. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. Internal auditors are employed by companies to do both financial and operational auditing. Their role in auditing has increased dramatically in the past two decades, primarily because of the increased size and complexity of many corporations. Because internal auditors spend all of their time with one company, their knowledge about the company’s operations and internal controls is much greater than the external auditors’ knowledge. That kind of knowledge can be critical to effective corporate governance. In fact, the Bursa Malaysia now requires its registrants to have an internal audit function.
The Institute of Internal Auditors professional practices framework provides the following definition of internal auditing:
This definition reflects the changing role of internal auditors. Internal auditors are expected to provide value to the organization through improve operational effectiveness, in addition to traditional responsibilities such as reviewing the reliability and integrity of information, ensuring compliance with policies and regulations, and safeguards assets. The objectives of internal auditors are considerably broader than the objectives of external auditors. This provides flexibility for internal auditors to meet company needs. Different companies vary in the extend of internal auditing and the areas on which the internal auditors focus. For example, at one company, internal auditors may focus exclusively on documenting and testing controls. At another company, internal auditors may serve primarily
According to Wikipedia, Internal auditing is a profession and activity involved in helping organizations achieve their stated objectives. It does this by using a systematic methodology for analyzing business processes, procedures and activities with the goal of highlighting organizational problems and recommending solutions. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. Internal auditors are employed by companies to do both financial and operational auditing. Their role in auditing has increased dramatically in the past two decades, primarily because of the increased size and complexity of many corporations. Because internal auditors spend all of their time with one company, their knowledge about the company’s operations and internal controls is much greater than the external auditors’ knowledge. That kind of knowledge can be critical to effective corporate governance. In fact, the Bursa Malaysia now requires its registrants to have an internal audit function.
The Institute of Internal Auditors professional practices framework provides the following definition of internal auditing:
This definition reflects the changing role of internal auditors. Internal auditors are expected to provide value to the organization through improve operational effectiveness, in addition to traditional responsibilities such as reviewing the reliability and integrity of information, ensuring compliance with policies and regulations, and safeguards assets. The objectives of internal auditors are considerably broader than the objectives of external auditors. This provides flexibility for internal auditors to meet company needs. Different companies vary in the extend of internal auditing and the areas on which the internal auditors focus. For example, at one company, internal auditors may focus exclusively on documenting and testing controls. At another company, internal auditors may serve primarily
References: i. Arena, M. & Azzone, G. 2009. ‘Identifying Organizational Drivers of Internal Audit Effectiveness.’ International Journal of Auditing, Vol. 13, pp. 43-60. ii. Arena, M. & Jeppesen, K.K. 2009. ‘The Jurisdiction of Internal Auditing and the Quest for Professionalization: The Danish Case.’ International Journal of Auditing. iii. Carcello, J.V., Hermanson, D.R. & Raghunandan, K. 2005. ‘Changes in Internal Auditing During the Time of the Major US Accounting Scandals.’ International Journal of Auditing, Vol. 9, pp. 117-127. iv. Coram, P., Ferguson, C. & Moroney, R. 2008. ‘Internal audit, alternative internal audit structures and the level of misappropriation of assets fraud.’ Accounting and Finance, Vol. 48, pp. 543-559. vii. Carey, P., G. Tanewski, and R. Simnett, 2000. “Voluntary demand for internal and external auditing by family businesses.” Auditing: A Journal of Practice & Theory 19, 37-51. viii. Abbott, L.J., S. Parker, G.F. Peters and D.V. Rama, 2007. “Corporate governance, audit quality and the Sarbanes-Oxley Act: Evidence from internal audit outsourcing.” The Accounting Review 82, 803-835. ix. Coram, P., Ferguson, C. & Moroney, R. 2008. “Internal audit, alternative internal audit structures and the level of misappropriation of assets fraud.” Accounting and Finance, Vol. 48, pp. 543-559. x. Coram, P., Ferguson, C. and Moroney, R. (2006). The Value of Internal Audit and Fraud Detection. xi. Giselle, B