How Internal Audit Is An Important Part Of The Company Management System

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How does internal audit participate in risk management?


Internal audit is an important part of the company management system, it is the company 's core business group. But how does it participate in risk management? This essay will have a short discuss on it.


"Practice of Internal Auditing Standards" of the internal audit made a clear definition: Internal auditing is an independent, objective assurance and consulting activity designed to add value for the organization and improve the operational efficiency of organizations. It uses a systematic, disciplined approach to evaluate and improve risk management, control and governance processes to help organizations achieve their goals (SPIRA, L. F. & PAGE, M. 2003).
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In this environment, in order to enhance the efficiency, company need to establish an independent control system. As a further control of the company, the various departments of enterprises can be effectively supervised by internal audit to achieve internal supervision and self-discipline of enterprises (BEASLEY, M. S., & HERMANSON, D. R. 2005). Therefore, the internal audit system is established to achieve self-improvement, serve as an important part of the objective requirements of internal oversight, but also part of the company management system.

Internal Audit on behalf of the Board of Directors should belong to the core layer of the corporate who perform oversight functions, the Board is the highest level group of companies, so the internal audit is part of the core layer of the board of directors has supervision and management behavior evaluation in favor of enterprises (BEASLEY, M & HERMANSON, D). ‘If internal audit belongs to other departments of company, such as the general manager, although it is closer than the board of directors, supervision can be combined with the reality, but general manager of the company does not do decision-making but only execute it, and therefore the independence of the audit process will be affected (FELIX L. & GRAMLING, A 2001).’ As part of the board of directors, internal audit has a higher level of audit independence and the authority are guaranteed conducive to internal audit should
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