Role of Internal Auditor

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Internal audit’s role in modern corporate governance
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Internal audit’s role in modern corporate governance

Recent events have highlighted the critical role of boards of directors in promoting good corporate governance. In particular, boards are being charged with ultimate responsibility for the effectiveness of their organisations’ internal control systems. An effective internal audit function plays a key role in assisting the board to discharge its governance responsibilities. Yet how does the board – and its audit committee – satisfy itself that internal audit is functioning effectively and efficiently?

The board’s responsibility for internal controls
Through working
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I n t e r n a l a u d i t ’s r o l e i n m o d e r n c o r p o r a t e g ove r n a n c e

Governing internal audit
Amidst all the debate over corporate governance and the board’s supervision of internal control mechanisms, surprisingly little attention has been given to the role of internal audit, and particularly to whom it is ultimately responsible. While several high level reviews by regulators and others have acknowledged that the internal audit function and the oversight of internal controls has become an important responsibility of boards, the implications of this for internal audit have not always been followed through. Thus in the US, the Sarbanes-Oxley Act of 2002 makes no mention of internal audit, or of any equivalent role other than the board’s role generally in the preparation of the accounts and the setting of accounting standards.

Critical success factors for an internal audit function
Is internal audit strategically positioned to contribute to business performance? – The mission and role of internal audit are defined within a wider governance framework and are effectively communicated. – The structure of internal audit promotes objectivity, consistency and business understanding. – Internal audit is funded in a way that promotes objectivity and consistency in the quality of services it
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