According to that document, the internal auditors must provide the Board with a mechanism to systematically review and evaluate the adequacy and effectiveness of the entity’s processes, systems and operations.
The audit area must be in tune with the objectives of its organizations and understand their expectations, which can vary drastically from one organization to another.
Remember that normally the activities of an internal audit function are carried out in four steps: planning, executing, informing and monitoring.
The internal audit works with the Board and management to identify the areas of greatest exposure, and those in which greatest security is that of a structured process; the Internal Audit must submit recommendations on the review areas during a given period in the form of an audit plan, which is typically established with a 12-month horizon, even if it is reviewed and updated periodically
The audit plan contains a number of areas, which are usually addressed as individual audit projects. In the execution of an audit project, the internal audit team evaluates the adequacy and effectiveness of internal processes and controls. It also performs detailed work in key areas as planned, to identify deficiencies.
The internal audit reports the findings and observations, as well as the conclusions, as appropriate. The conclusions and management response plans are agreed upon and communicated through the Board of Directors or the relevant Board committee. In addition to reporting the results of individual audits, the Internal Audit normally provides summary reports to allow a broader picture of the entity’s controls and risk exposures to be developed.
According to internal audit companies in India, the internal audit will work with the management to track the progress made, to address the deficiencies identified in the previous audits and ensure that these are resolved in a timely manner and in their entirety.
Another issue considered in the document of the Institute of Internal Auditors of Australia, has to do with the key attributes of an internal audit function, which are established in international standards for professional practice.
An effective internal audit function should:
- Have direct access to the Board of Directors or the Board Audit Committee to discuss the plan and any findings or concerns that the internal auditor may have.
- Have access to all activities, records, premises and personnel of the entity as necessary to fulfil its responsibilities.
- Comply with the International Standards for the Professional Practice of Internal Audit.
- If the internal audit does not meet these key attributes, your statements may not be accepted normatively.
What is expected of the internal audit?
An audit committee and board management have expectations about internal auditing. As told by internal audit companies in India, if you have the necessary resources and are supported by the Board, you must:
- Provide independent and objective evaluations and opinions on the most important areas of the business.
- Follow a systematic and disciplined approach to focus on the most important.
Provide independent guarantees on the adequacy and effectiveness of the entity’s governance, risk management and internal controls and provide confidence that the entity complies with the relevant laws and regulations.