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. [1] processes. [2] integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.
The scope of internal auditing within an organization is broad
and may involve topics such as an organization's governance, risk
management and management controls over: efficiency/effectiveness of
operations (including safeguarding of assets), the reliability of
financial and management reporting, [3] [4] compliance
with laws and regulations. Internal auditing may also involve
conducting proactive fraud audits to identify potentially fraudulent
acts; participating in fraud investigations under the direction of fraud
investigation professionals, and conducting post investigation fraud
audits to identify control breakdowns and establish financial loss.
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.
As a result of their broad scope of involvement, internal auditors may
have a variety of higher educational and professional backgrounds.
The Institute of Internal Auditors ( IIA)
is the recognized international standard setting body for the internal
audit profession and awards the Certified Internal Auditor designation
internationally through rigorous written examination. Other designations
are available in certain countries. [5]
Chief Audit Executive ("CAE") who generally reports to the
Audit Committee of the
Board of Directors, with administrative reporting to the
Chief Executive Officer (In the United States this reporting relationship is required by law for publicly traded companies
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