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Nature of Internal Audit work (Governance risk control(standards) (Risk…
Nature of Internal Audit work
Organisational terminology
Be able to understand where management comes from and where they are going
Uses strategic plan which turn to provide in performing daily activities
The importance of control: Control is part of everyday life.
Objectives of internal control
Operational objectives:Safeguarding of assets
Reporting objectives: Internal and external controls reporting
Compliance objectives: Compliance with laws, regulators and contracts
The control environment: Forms the foundation of the COSO control frame work and provides the atmosphere in which people conduct their activities
Organisational hierarchy
Suitable for the organisation to be able to provide the necessary information to the managers
Arrangements is the way in which the activities should be grouped
communication tasks and responsibilities to personnel
An organisational code of conduct
A manual on accounting and operational plans
Job description
The control philosophy and style of senior management
Planning: To ensure that every individual understand his or her specific role in achieving the objectives of the organisation
Organising: This implies the co-ordination of people and plans in order to execute the planning
Directing: This is the process of allocating resources to ensure that the objectives are met.
Controlling: A process to ensure the the directed actions have been executed as planned to ensure that objectives are achieved.
Human resources management
The appointment and evaluation of personnel a formal evaluation process should be followed when appointing a personnel
A clear career path possibilities must be made known to the personnel in order to create promotion possibilities
Types of internal controls
Segregation of duties
Independent checks
Classification of control activities
Corrective controls takes over when improper outcomes occur and are detected
Detective controls are usually more expensive than preventive but they are too essential
Preventive controls avoid the cost of correction
Governance risk control(standards)
Control process aim to support the organisation in the management of risks that threaten the achievement of it's objectives
Risk management: future uncertain event that will prevent an organisation from achieving their objectives
Risk policy
Management must always monitor risk
Come up with relevant recommendation
overseeing risk management and control
Making strategic and operating decisiond
Need to help the company to achieve it's objectives
Must always come up with new things
Responsibilities of internal controls
Management implements internal controls
External auditor should finance accounting systems
Internal auditor should assess effectiveness of internal control activities to achieve engagement objectives
Advantages and disadvantages of internal control
Advantages: achievement of goals, prevention of resources losses, build reputation
Disadvantages: inherent limitations of internal control systems, cannot ensure success of organisation