Question

Question No 3: “The role of internal audit is to provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively” On the light of the above statement, explain what features of an internal audit department would enable the external auditor to trust on the work done by the internal auditing department? Use your own views and response to question. (300 words)

Answer 1

External Auditior in order to trust on the work done by the internal audit department(or Internal Auditior) must evaluate the level of competence of internal auditors.Competence of the internal audit function is likely to be deemed satisfactory where it can be evidenced that the function as a whole operates at the level required to enable assigned tasks to be performed diligently and in accordance with applicable professional standard.To make such evaluation,following factors are taken into consideration:

a)Whether there are established policies for hiring training and assigning internal audit engagements.

b)Whether the internal auditors have adequate training and proficiency in auditing.

c)whether the internal auditors possess the required knowledge relating to the entity's financial reporting and the applicable financial reporting framework

d)whether the internal audit function possess the necessary skills to perform work related to the entity's financial entity.

Additionally,Internal audit department must have following features:

a)The internal audit function reports to those charged with governance rather than solely to management(e.g. CFO)

b)The internal audit function does not have managerial or operational duties taht are outside of the internal audit function.

Inernal auditor have a professional duty to provide unbiased and objective view.They must be independent from the operations they evaluate and report to the highest level in an organisation(i.e those charged with governance).As above said,to be effective the internal audit activity must have qualified,skilled and experienced people who can work in accordance with the code of ethics and the internatinal standard.