Internal Audit Flashcards
All things IA (9 cards)
Role of an Internal Auditor
(CIIA)
Provide assurance to managers that all key risks are being managed effectively
Governance
Its are crucial. As they are catalysts of change
Challenge current practises, and champion best practice
PWC says
Internal audit must increasingly consider firm risks as part of their role
Key papers
Cadbury - financial; Controls focused
Turnbull - Expands on general system wide controls covering key risk
Internal Audit Over Time
In more static environments of the past, they ensured compliance and system checks.
In todays environment, they do the aforementioned, but also help with new strategy, advocate for change, support good practice and call out bullshit. They also add value through consulting.
Spira and Page said internal audit…
Are responsible to managers, but also to other stakeholders through risk management and identification, through the audit committee. Scope has expanded.
Internal auditors were seen negatively because..
They were seen almost like organisational police, and often engaged in BPR, which conflicts with auditees.
Modern Internal Auditors are seen more positively now…
Because they add value, provide consultancy based advice, understand risk upside, and downside, and see ways to promote growth, as per Turnbull reports.
Internal auditor independence conflicts/Issues
The longer an internal auditor is in the firm, the more experience they obtain and more effective they become.
The caveat; They lose independence because they become familiarized with people and processes
They provide advisory solutions, which can sometimes detract from the core responsibilities.
They work under management, and can be pressured either through budgets, or absolute influence, especially regarding financial focuses.
Internal audit is seen as the way to coach future managers, there is personal interest for harmony, and often start with no process knowledge, and thus may be susceptible to control managers opinions.
