Internal Audit Critical Analysis Essay

A Critical Analysis of Independence of Internal Audit Function

Abstract:

Internal Audit Function has played in vital role in the organizations in the modern world. Internal audit functions helps in depicting out the fraud and errors that are created in the financial reports of the enterprise which creates risks for the organization. Henceforth, comes in the auditors responsibilities to carry out their relevant procedures with the documentations provided by the Management to gather information on how strong the organizations internal control system has minimized the fraudulent activities. The independence of the Internal Auditor therefore, is most important in the case

For professionalism to be enacted by the auditors, it is important that integrity, competence and due care needs to be practiced. Integrity maintains high standards achievements and conduct in the organization. Competences provide intelligence, education and training for the betterment of the auditors to perform well in the audit function. According to the CLERP Act and the Sarbanes-Oxley Act 2002, it is affirmed that the audit committee is established amongst the board of directors for the purpose of overseeing the accounting and financial reporting processes of the issuer of the financial statements. An auditor is required to be independent from the entity it has to audit. The independence requirements apply to auditors that are legally enforceable and are located within these legislations and standards of the corporations act. Maintaining independence has a number of aspects that the auditors must be mindful of throughout the clients/auditors relationship. There should be no conflict of interest situations while the audit process is being carried out. Auditor rotation is granted by the Australian Securities and Investments