Internal audit and corporate governance Essay Example | Topics and Well Written Essays - 2500 words

Internal audit and corporate governance - Essay Example Although internal auditors are characteristically accountants, this activity can also be carried out by other qualified experts who are knowledgeable with the company's functions as well the necessary regulatory requirements. (Friedberg, 2004) The span of internal auditing in an organization is expansive and it may engage internal control issues such as the effectiveness and efficiency of business processes, the consistency of financial reporting, preventing and inspecting fraud, protecting resources and other important assets, and observance with the laws and organizational strategies. (Friedberg, 2004) Internal auditing repeatedly requires measuring observance with the businesses' policies and procedures. Nevertheless, internal auditors are not accountable for the implementation of business activities; they give advice to the senior management on the subject of how to better accomplish their responsibilities. Management is responsible for internal control. (Friedberg, 2004) Management sets up the course of action and designs processes to facilitate the organization in achieving particular objectives in each particular field. Internal auditors perform audits to evaluate whether the policies and processes designed are operating effectively and provide recommendations for improvement. (Friedberg, 2004) To execute their responsibility efficiently, internal auditors have need of self-rule from management, to facilitate open and clear assessment of organizational activities and personnel. Although, internal auditors are part of company management and are paid by the company, but the most important client of internal audit activity is the body charged with supervision of management's actions. (Friedberg, 2004) Internal auditors may also help businesses' commence and retain Enterprise Risk Management processes. The Internal auditors also play an imperative task in facilitating businesses' to carry out a top-down risk assessment. In these concluding two fields, internal auditors usually are part of the project team in an advisory position. Based on a risk evaluation of the business, the internal auditors, and the senior management determines where to concentrate the internal auditing uphill struggle. (Rezaee, 2002) Internal auditing activity is normally carried out as solitary or as more distinct projects. A characteristic internal audit plan comprises of the subsequent measures. First and fore mostly, it begins with establishing and sharing the degree and purpose for the audit to appropriate management. This is followed by developing an understanding of the business division in evaluation. This encompasses objectives and significant operation types, it involves analysis of credentials and dialogues; flowcharts and accounts may be created if necessary. (Rezaee, 2002) Then the identified control measures are used to make certain that each crucial business transaction is correctly controlled and scrutinized. After that, the internal auditors work out and execute a risk-based sampling and examining approach to find out whether the a good number of important controls are working