Role of Internal Auditor

Having internal controls is one thing, but how the company evaluates that control is a matter all by itself. Being an independent auditor, it is our job to understand an entity and

Corporate governance is the responsibility of an organization’s board of directors (BOD). The internal auditor (IA), the external auditor (EA), and the information technology (IT) auditor all play important roles in the process of corporate governance. By using established frameworks established by the Sarbanes-Oxley Act (SOX), the Integrated Framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and the Control Objectives for Information and related Technology (COBIT), organizations can demonstrate their adherence to regulations and legal requirements. Under SOX, these control frameworks have become the law and are no longer voluntary best practices. The audit process itself assists organizations

In the last decade, the world of business has been subjected to significant changes. Globalization has given a new meaning to the way in which business is now conducted; i.e. business in a world devoid of geographical boundaries or time zones. Global expansion has also given rise to many emerging firms and laid the foundations for fierce competition amongst existing industries. Internal auditing is no exception. In order not to face complacency or obsolescence, the internal auditing industry has to be proactive and adapt to changing market trends.

Auditors have the responsibilities as well as management to report internal controls. The auditors must examine closely management’s claim of effectiveness and also physically test the controls. After the examination, the auditors should express their opinion and any recommendations to fix any internal control weaknesses.

Internal controls are regulated by the Sarbanes-Oxley Act of 2002. This act assigns responsibility for a company’s internal controls on its executives and directors (Kiesco et.al., 2008). This assignment of responsibility forces the company to use effective internal controls by making a certain group responsible. The act also established the Public Company Accounting Oversight Board which regulates the activities of auditors. Together, assigning responsibility and defining the standards of auditors, the Sarbanes-Oxley Act of 2002 helps to safeguard a company’s investments, assets and future successes by discouraging fraud and theft.

The Sarbanes-Oxley Act of 2002 significantly increased the authority of audit committees in overseeing their companies’ financial reporting processes. One of the audit committee’s responsibilities is that they oversee the financial reporting process. Audit committees are required to review and discuss the annual audited financial statements with management and the external auditors. They also monitor control processes. Monitoring internal controls directly affects the reliability of financial statements is generally understood to be a function of audit committees. SOX section 301 directed the SEC to require audit committees to establish procedures to handle complaints on accounting, internal accounting controls, or auditing matters and to provide confidentiality to employees who submit complaints. Section 301 also states that audit committees are solely responsible for all the aspects relating to selecting, hiring, and replacing external auditors, whom report to the audit committee. An audit committee approves the compensation to external auditors. It also states that audit committees must discuss and resolve disagreements between management and external auditors.

When auditing a public company, the auditor must form an opinion on the effectiveness of internal control

Corporate governance strategies require the effective implementation of internal control and the appointment of independent audit committee. Internal controls will help to effectively run the organization’s operations whereas on the other hand, audit committee will help to maintain the transparency of financial information and boosts investor’s confidence (Gugler, Klaus, 2001).

Section 404. Management assessment of internal control: This section needs every annual report of a in public listed company to contain internal control report stating management’s responsibility to establish and maintain an adequate system of internal control financial reporting similarly as an assessment of the effectiveness of internal control structure and procedures. Auditors audit the financial statements of the company must issue a consulting report regarding the effectiveness of the company internal

The audit committee’s responsibility was to look over the accounting and financial reporting process as well as the financial statement audits; appoint, compensate and oversee the external auditor; and to ensure that the company has a whistleblower program. (p. 52) At first glance the committee could notice that something was not right with the company’s financial records. But nothing was done and nothing was said.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.

Does the Board or audit committee understands and exercises oversight responsibility over financial reporting and internal control?

The main purpose of this paper is to analyze the principal players and influencers within corporations that monitor, and control the financial and operational activities that shape corporate governance outcomes. The role that boards of directors, auditors, rating agencies, security analysts, accountants, and creditors play within corporate operational activities will be the central component of our analysis. Particular focus will be placed on the duty of the board of directors to act in the company’s “best interest” as well as the execution of quality auditing, that auditors are charged to produce. We’ll examine the positive attributes and potential risks that these principal agents present as I provide my assessment of three

The internal auditor have a several roles in the company which is the first one the audit committee need to discharge and restrict the governance responsibilities and the

This paper critically analyses the independence of the internal audit function through its relationship with management and the audit committee. Given the growing role of internal auditing in contemporary corporate governance and independence has gained renewed attention.