Internal Audit Definition
“Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”
Required:
Evaluate the objectives of FOUR (4) governance processes and FOUR (4) risk management that an internal auditor must consider and identify the audit work that must be done. (10 marks)
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Governance Processes
The objectives of the governance processes are the following:
- To ensure that the organization is able to achieve its mission
- To ensure the right strategic direction of the organization
- To ensure that the operation of the entity will be carried out in compliance with the laws and regulations and internal systems and procedures
- To ensure the stability and growth of the entity
- To protect the interest of the stakeholders
- To prevent fraud and other malfeasance in the entity
- To safeguard the assets of the entity and help to preserve the environment
- To ensure effective organizational performance and accountability
- To ensure smooth information flow and proper risk management
- To co-ordinate the activities and communication of information among the board,
- To establish and monitor whether controls and standards are working.
Audit work - Evaluation of the design, implementation and effectiveness of organization’s ethics-related objectives, programmes and activities
- Assessing whether the information technology governance of the organization supports the organization strategies and objectives
Risk management
Objectives to be assessed in risk management are ensuring that:
- risk procedures are in place
- Strategies are in place and are working effectively.
- Reliability and integrity of financial and operational information
- Effectiveness and efficiency of operations
- Safeguarding assets
- Compliance with the Laws, regulations, and contracts
Audit work: - Identifying and evaluating significant exposure to risk management and control system.
- Monitor and evaluate the effectiveness of the organization’s risk management system
- Suggest improvement of the risk management systems.