Internal Audit Literature Review

Purpose

The purpose of this literature review is to determine and discuss the factors of internal audit effectiveness. The factors being, the Institute of Internal Auditing standards along with characteristics of the internal audit, quality internal audit and internal audit theories.

1. Institute of Internal Auditors Standards along with characteristics of the internal audit team

1.1 Compliance with standards

Compliance with Institute of Internal Auditing Standards has great influence on the effectiveness of internal auditing, therefore when complied with these standards the effectiveness of internal audit is expected to increase (Little, et al., n.d.). All internal auditors are accountable for complying with the standards related to individual

It can thus be argued that internal audit effectiveness will be increased. Standard 1220 – Due professional care, states that “Internal auditors must apply care and skill expected of a reasonably prudent and competent internal auditor. Due professional care does not imply infallibility” (The Institute of Internal Auditors (IIA), 2017).When exercising due professional, internal auditors must consider the extent of that is required in order to achieve the engagement’s objective, and consider the adequacy and effectiveness of governance, risk management and processes (Njorege,

Managers work hand in hand with the organisation as agents to perform a service on behalf of people who delegate decision making authorities to managers. Existence of audit committees, the external and internal auditors will assist the organisation to enhance their performance and will ensure that management carries out their plans according to procedures (Endaya & Hanefah, 2013). Internal auditors are considered to be agents and monitors for a variety of internal audit users which include the board of directors, senior management and audit committee. Senior management usually hires internal auditors, but they are also agents of the board of directors and audit committee who trust the internal auditor’s ability to evaluate the work of senior managers. Internal auditors as agents of the organisation should perform engagements at a professional level and are required to be educated, have a professional qualification, experience, skills and other relevant competencies to carry out their responsibilities diligently. Having internal auditors with such proficiency and existence of continuous professional development programs for the internal audit team can increase confidence levels of the audit committee and the board of directors’. The existence of an effective audit committee in organisations assists in enhancing internal audit independence and reduces senior management