Module 6

Question 1

what should an effective internal audit provide?

Answer 1

assurance, advice and insight

Question 2

What are the key elements of an internal audit function?

Answer 2

I’M WISE

independent of day to day operations
measure and evaluate
takes place Within the organisation
Integral part of the framework of business controls
Service to all levels of the organisation
looks at the Effectiveness and Efficiency of operations

Question 3

Main objectives of internal audit

Answer 3

• provide reasonable assurance on the adequacy and efficiency of risk management and controls
• assist in discharging of responsibilities

Question 4

who does the internal audit function report to

Answer 4

the audit committee ( if it exists) of the CEO

Question 5

UK Governance Code recommendations on an IAF

Answer 5

• where an IAF exists it should report to the audit committee
• where an IAF doesn’t exist the audit committee should assess annually if it is required

Question 6

Why would an org choose to have an Internal audit function

Answer 6

particularly in larger companies, it is difficult for directors to oversee all goings-on which increases the risk of fraud. An IAF provides assurance that the management and control is robust.

Question 7

What is the role of internal audit?

Answer 7

• Challenge processes and controls to identify and respond to risks
• monitor progress to resolve issues
• assist in activities to increase awareness of risk and controls

Question 8

Types of internal audit

Answer 8

Not exhaustive

• financial audit
• systems audit
• management audit
• value for money audit
• contract audit
• operational audit
• post implementation review
• investigations
• Inspections and quality control
• compliance audit
• follow-up audit
• culture audit

Question 9

Aspects that contribute to an effective internal audit function

Answer 9

PARISS

Process- formal procedures regarding supervision and review and a detailed schedule of audits.

Audit committee- IAF should be overseen by audit committee of CEO in smaller companies

Resource and competence - should be able to carry our effectively

Independence

Status and Position- respected by staff

Standards- follow guidance and act professionally

Question 10

How can an organisation ensure the IAF is independent?

Answer 10

• report to the audit committee
• have the audit plan approved by the audit committee
• audit committee appoint the IAF manager
• remuneration to support independence
• audit staff should have no involvement in operational areas