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Faqs

FAQs

Frequently Asks Questions

  1. The role of internal audit is to provide independent assurance that an organization’s risk management, governance and internal control processes are operating effectively. The scope and objective of internal auditing vary widely and depend on the size and structure of the entity and the requirements of its management.

    Ordinarily, internal auditing activities include on or more of the following:

    • Monitoring of internal controls established by the management and recommending improvements thereto, if any.
    • Examination of financial transactions and operating information
    • Review of the economy, efficiency and effectiveness of operations including non financial controls of an entity.
    • Review of compliance with laws, regulation, other external requirements and with internal policies of the organization.

Internal auditing is an appraisal activity established within an entity as a service to the management. The requirement of internal auditing is determined by the organization policy, necessity of the management and regulatory requirement. It may not be mandatory for all the entity to have internal auditing.

  1. The role of internal auditing is determined by management and its objectives differ from those of the external auditor who is appointed to report independently of the financial statements. The internal audit function’s objective vary according to management’s requirements. The external auditor’s primary concern is whether the financial statements are free of material misstatements. Despite of some common characteristics, following are the primary differences between these two functions;
    External Audit Internal Audit
    Reporting Shareholders or members who are outside the organizations governance structure. The board and senior management who are within the organizations governance structure.
    Objectives Add credibility and reliability to financial reports from the organization to its stakeholders by giving opinion on the report Evaluate and improve the effectiveness of governance, risk management and control processes.  This provides members of the boards and senior management with assurance that helps them fulfil their duties to the organization and its stakeholders.
    Responsibility  for improvement None, however there is a duty to report problems. Improvement is fundamental to the purpose of internal auditing. But it is done by advising, coaching and facilitating in order to not undermine the responsibility of management.

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