Role of Internal Audit Department

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Internal audit procedure

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Role of Internal Audit Department:

Role of Internal Audit Department -Prepared by Resham & Monica

What is Internal Auditing?:

What is Internal Auditing? Internal auditing is a catalyst for improving an organization’s effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes. Internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Internal auditors are not responsible for the execution of company activities; they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities.

The Evolving role of Internal Audit:

The Evolving role of Internal Audit Initially, internal auditors were focusing on compliance of operations with the set policies and procedures. Then, the scope increased to cover the internal control environment.

Need of Internal Audit:

Need of Internal Audit

Need of Internal Audit :

Need of Internal Audit Whether the systems and processes that make sure the organisation is on track are themselves working well.  That is assurance ! Improve the systems and processes where necessary. That is consulting !

Role of Internal Audit:

Role of Internal Audit

Role in Internal Control:

Role in Internal Control Internal Audit is designed to provide reasonable assurance regarding the achievement of objectives in the following internal control categories: Effectiveness and efficiency of operations. Compliance with laws and regulations.

Role in Internal Control:

Role in Internal Control Management is responsible for internal control. Managers establish policies and processes to help the organization achieve specific objectives in each of these categories. Internal auditors perform audits to evaluate whether the policies and processes are designed and operating effectively and provide recommendations for improvement.

Role in Risk Management:

Role in Risk Management Management performs risk assessment activities as part of the ordinary course of business in each of these categories. For e.g. marketing planning, capital planning, budgeting, hedging, incentive payout structure. Internal auditors may evaluate each of these activities, or focus on the processes used by management to report and monitor the risks identified.

Role in Risk Management:

Role in Risk Management Facilitate identification of key risk areas for the organization as well as all key processes. Assist in the development of standards and processes flow documentation. Assist process owners in understanding assessing, designing and document controls. Inventory organizational risk compliance activities and strive to integrate them into a common methodology. Evaluate business and process owners on taking responsibility for ERM.

Role in Corporate Governance:

Role in Corporate Governance Board of Directors & Committees. Laws and regulations. Business Practices & Ethics. Disclosure & Transparency. Enterprise Risk Management. Monitoring. Communication. Components

Role in Corporate Governance:

Role in Corporate Governance When all the components of CG framework operate effectively and are well coordinated, corporate governance provides a platform to improve business performance and enhance stakeholders value. By providing assurance on the organization’s risk management, control and governance processes, internal auditing becomes a key cornerstone for effective organizational governance. Support the audit committee in fulfilling its responsibilities.

Role in Fraud Detection:

Role in Fraud Detection The final responsibility of detection of fraud lies with management and the auditor cannot be held liable for any non-detection of fraud due to the inherent limitations of audit. However, it is the responsibility of an auditor to carry out his work with professional skepticism and to bring any fraud to the management's attention and consider withdrawing from the engagement if management does not take appropriate actions.

Role in Financial Reporting:

Role in Financial Reporting The Auditors report includes their findings, recommendations, and any responses from management. Each audit finding within the body of the report may contain five elements, sometimes called the "5 C's": Condition Criteria Cause Consequence Corrective action

Challenges Faced by Internal Auditors:

Challenges Faced by Internal Auditors Remain independent and objective, yet being part of the organization. Require business knowledge, insight, good judgement and effective communication. Maintain a focus to prevent and detect fraud.

PowerPoint Presentation:

Internal auditor’s unique position in an organization allows him or her to observe organizational structure and design, while not having direct responsibilities on them.

PowerPoint Presentation:

Thank You !!!

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