Question

In 500 words each write about how the justification for audits and planning an audit engagement

Answer 1

. Provides Objective Insight

You can’t audit your own work without having a definite conflict of interest.

Your internal auditor, or internal audit team, cannot have any operational responsibility to achieve this objective insight. In situations where smaller companies don’t have extra resources to devote to this, it’s acceptable to cross-train employees in different departments to be able to audit another department. By providing an independent and unbiased view, the internal audit function adds value to your organization.

2. Improves Efficiency of Operations

By objectively reviewing your organization’s policies and procedures, you can receive assurance that you are doing what your policies and procedures say you are doing, and that these processes are adequate in mitigating your unique risks.

By continuously monitoring and reviewing your processes, you can identify control recommendations to improve the efficiency and effectiveness of these processes. In turn, allowing your organization to be dependent on processes, rather than people.

3. Evaluates Risks and Protects Assets

An internal audit program assists management and stakeholders by identifying and prioritizing risks through a systematic risk assessment. A risk assessment can help to identify any gaps in the environment and allow for a remediation plan to take place.

Your internal audit program will help you to track and document any changes that have been made to your environment and ensure the mitigation of any found risks.

4. Assesses Controls

Internal auditing is beneficial because it improves the control environment of the organization by assessing efficiency and operating effectiveness. Are your controls fulfilling their purpose? Are they adequate in mitigating risk?

5. Internal Audits Ensure Compliance with Laws and Regulations

By regularly performing an internal audit, you can ensure compliance with any and all relevant laws and regulations. It can also help provide you with peace of mind that you are prepared for you next external audit. Gaining client trust and avoiding costly fines associated with non-compliance makes internal auditing an important and worthwhile activity for your organization.

An engagement letter is essentially a contract that lays out the terms of the client/service provider relationship, whether it’s with regard to an audit or not.

It details everything about how the service provider and client will work together. For example, it might cover:

• Fees and how payment works
• Scope of work and timeline for how/when that work will be conducted
• What happens if there’s a dispute or disagreement

It’s an essential part of making sure that the project or service runs smoothly and sets expectations on both parts for how that relationship will function. It also serves as a contract and legal protection for both client and the service provider