Internal audit tends to persist and revolutionize the system within a company. The external auditor is an accountant who works independently of a particular company. Their task is to scrutinize the company's records and operations to ensure that the company's annual financial statements are exact. External auditors
Internal auditors Internal auditors provide operational, strategic, and tactical value to the business. They inform the Change Advisory Board and management about the other stakeholders’ understanding of change management and adherence to policies. They validate the efforts of management to be effective and proactive in facing current and future threats. They compare present practices within the organization with regulatory guidelines and industry practices. What are the responsibilities of internal auditors?
The internal audit function will be free of any undue influences which could restrict, over-rule or otherwise affect the judgment as to the content of a report or in any way require the department to function under duress or which could affect the department or conduct of an investigation. There will be no restrictions on the scope of the internal audit activity’s work. To reviewing the systems established by management to ensure compliance with those policies, procedures, laws and regulations which will have a significant impact on operations, and determining whether the board is in compliance; to safeguard assets and as an appropriate way to verifying the existence of those assets. This will include operations or programmes to ascertain whether results are consistent with established primary objectives and goals; or whether the programme are being carried out as
Organizations innovate and grow, meaning there is constant change and new ventures on the horizon. Whilst dealing with “new thinking” required for Internal Audit relating to strategic and innovative new ventures, we know that it is important not to shift focus from basic, hygienic risk and control management. We also know that it is important to keep up with the risk and control of the business as it evolves into a business of tomorrow. Therefore, organizations are investing more on specialized audits. Internal audit has advanced significantly in the last
The first step that the auditor should take is to gather as much information about any security procedures and policies that may have been in use following the information collected from the records available. Since each policy may have a different aspect that it works on, the findings from the audit may present evidence that may be vital in identifying the existing procedures or the absence of any policies or procedures. The existence of policies and procedures enables a company to reduce the occurrence or the impacts of a given risk. The lack of such policies may lead to reduced risk management
This is achieved by ensuring the whole organization is aware of the controls, the systems in place and they are adhered. Internal auditor independence in the functions and responsibilities determine the quality of report. The audit committee support and expertise ensures the reporting is not influenced by the management. CBK Prudential guidelines 2013 (CBK/PG/02) requires that all commercial banks establish an independent board of Audit committee to provide an independent oversight of the institution’s financial reporting and internal control system, ensure checks and balances within the institution are in place and to recommend appropriate remedial action regularly. Financial development of a country is indicated by the growth of its financial institutions, in Kenya there is tremendous growth of the banks, microfinance institutions and the agency banking (Kiambati et al, 2013).
Internal audit function (IAF) act as a first line defense in corporate governance (CG) for checks and balances. Sometime, it has deeper understanding of current and have potentials role IAF in CG. Internal Audit (IA) provide a better future research and development on a new IAF. Example: role to ensure provides a quality of CG. CG consist of audit committee (AE), external auditor (EA), IAF and management.
The public sector auditors are responsible for the mandate or obligations for public sector entities lawfully. A broader scope of audit is implemented in public sector that in private sector. INTOSAI or relevant setters deal with auditor reporting requirements. The auditor’s report is lengthier and more explanatory, reports more widely on aspects of performance than the standard auditor’s report. Consultation Paper needs to solve the issues of public sector encouraged by IAASB.IAASB will further solve special issues of public sector with INTOSAI and relevant setters if necessary.
(Audit Process, Audit Procedure, Audit Planning, 2010) The purpose of an audit is to provide an objective independent examination of the financial statements, which increases the value and credibility of the financial statements produced by management, thus increase user confidence in the financial statement, reduce investor risk and consequently reduce the cost of capital. Related with the uses of microcomputer to the audit process, below is the explanation on how microcomputer helps audit
The scope of the Internal Audit is firm wide and it reports to the audit committee. Annually, leveraging the ongoing risk assessments, it develops the audit plan wherein the business units within the firm are audited. The approach to internal audit is risk based. That is,