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
INTRODUCTION Should the audit firms continue with self-regulating or should the government intervene by implementing the mandatory rotation of audit firms? This question is influenced by the increasing public’s concern about the conduct of professional auditors. Currently firms are self-regulating but if the government intervenes, the public might be at ease. Auditors face many ethical dilemmas and the way they resolve these dilemmas results in their professionalism being questioned. There are certain concerns that society has when it comes to auditors codes of professional ethics and the crucial role that they play to make sure that these professionals conduct themselves in a professional manner.
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
The audit committee should collectively have sufficient financial knowledge of financial risks, financial sustainability reporting and internal controls. 3) The audit committee should oversee integrated reporting. The board of a company may delegate its responsibility for reporting and internal controls to the audit committee. Jackson and Stent (2010) noted that the audit committee will make recommendations to the board which will, after evaluating such recommendations, approve or reject them. One of the responsibilities of the audit committee is to monitor the integrity and completeness of the company’s financial reporting.
Therefore, an auditor is not exclusively to satisfy the needs of an individual client. An auditor shall comply with the ethical requirement by the by-laws. However, auditor often faces ethical dilemma and ethical conflict during their work. An auditor is required to resolve a conflict in complying with the fundamental principles through the formal or informal conflict resolution process (By-Law s. 100.15). When initiating either a formal or informal conflict resolution process, several factor such as relevant facts, ethical issue involved, fundamental principles related to the matter in question, established internal procedures and alternative courses of action has to be considers to determine the appropriate course of action.
The experiments carried out include studying and questioning the policies, work instructions, procedures, manuals and other materials that form a part of management systems. Further, the inspection of scenes, events and processes is also included. Moreover, the examples which help to carry out the tests are also collected. During the audits, questions which are being verbally answered, are required to be supported by examples in the form of references to work instructions, manuals and procedures since it is an enigmatic help for the process of monitoring results. The environmental audit comprises of a well-formed, systematic approach.
The purpose of an audit is to enhance the credibility of financial statements by providing written reasonable assurance from independent sources that the financial statements present a true and fair view in accordance with the accounting standards. This objective will not be met if users of the audit report believe that the auditor may have been influenced by other parties, more specifically the enterprise managers/directors or by conflicting interests (A.O.Oladipupo, F.I.O. Izedonmi, 2013) There are three main ways in which the auditor‘s independence can manifest itself: Programming independence, investigative independence and reporting
The board must possess an appropriate degree of management, technical and other expertise, coupled with the necessary stature and mindset to perform its strategic and oversight functions. Board members must be impartial and willing to question the management’s activities. The audit committee should also have suitably experienced qualified, independent and active members. Some studies such as Carcello and Neal (2003) contend that use of diligent and qualified Audit committees ensure effectiveness of internal control. Senior Management is responsible for implementing Board committee’s decisions and approved by the Full board.
Internal Audit Department comprise of qualifies auditors who are named internal auditors. Internal audit focus on adherence to management operation, internal control systems, proper record keeping and fraud detection. In public sector, audit carried out by appointed staff of the organisation to independently and objectively review and evaluate organisation activities to maintain or improve the efficiency and effectiveness of internal control and governance. In Malaysia, internal audit will help organisation to ensure public accountability, governance, integrity, transparency and quality service
In this sense, it will be useful to identify the particular responsibilities of an auditor. 1.6. Code of Ethics The code of ethical and professional conduct in the field of financial audit and accounting attaches importance to the purpose of the two professions that is represented by job performance at the top standards of professionalism, to achieve the highest level of performance and normally to attain the public interest. As revealed, auditing should implement and maintain the Code of Ethics. The Code of Ethics utters principles and potentials governing behavior of persons and businesses in the conduct of auditing.