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MANAGING THE INTERNAL AUDIT FUNCTION - Coggle Diagram
MANAGING THE INTERNAL AUDIT FUNCTION
Responsibilities of Those Charged
with Governance : to the
Internal Audit Function :fire:
The Board of Directors :explode:
The ultimate responsibility of the BOD is on the company’s governance, risk management, and internal controls & ensuring that:
There is a sound framework for governance, risk management, and internal controls.
An internal audit function is established and appropriately positioned within the company.
The CAE reports directly and functionally to the Audit Committee.
The internal audit function is independent of management and the functions, which it audits.
A corporate disclosure policy and process are put in place to ensure that all information disclosed to the public, including reports relating to the internal audit function, are timely, comprehensive, and reliable, effective internal audit activities during the year.
The Audit Committee :silhouettes:
Approving the appointment and removal of the CAE or service provider, if the internal audit function is outsourced.
Assessing the performance and approving the remuneration of the CAE.
Reviewing and approving the internal audit charter. The internal audit charter may also be presented to the Board of Directors for approval.
Reviewing and approving the risk-based internal audit plan, internal audit budget and resource plan.
Reviewing the progress of the audit plan.
Ensuring the adequacy of the scope of audit and addressing resource and scope limitations.
Management :star:
Inviting the CAE as an observer to management meetings and deliberations on governance, risk management, and internal control processes.
Providing unrestricted access to information, records, physical properties, and personnel, including management, which are relevant to internal audit work.
Providing input and feedback to the internal audit planning process.
Implementing internal audit recommendations to improve the effectiveness of governance, risk management, and internal control processes.
Staffing in IA Department :silhouettes:
Body of knowledge & charter :star:
Knowledge & skills include:
Proficiency in applying IA standard, procedures & techniques to perform effective & efficient IA.
Adequate knowledge on accounting principles & technique, management principles, fundamental laws, economics, taxation, finance and etc.
Proficiency
It may also be known as terms of
reference.
CBOK assist CAE in establishing staffing needs :pencil2:
IA should focus on risk areas that pose the greatest threat to the organization.
IA audit plan should address the governance parties concern so that their perceptions on the IA will change from providing assurance on financial & compliance controls to other challenging issues.
CAE should assess the audit team’s recent trend of workflow & update the staffing strategy accordingly.
Selecting Internal Auditors :fountain_pen:
The CAE should design an appropriate process for hiring & interviewing to ensure that only candidates with the appropriate qualification and experience are selected.
Screening the prospective candidates’ background and references should be undertaken.
Internal Audit Hierarchy :pen:
The internal audit department should comprise of professionals with relevant and related qualification (e.g. possess the Certified Internal Auditing (CIA) qualification and a member of a professional body), experience and skills.
The years of experience in the internal audit profession would promote an internal auditor to the appropriate senior level.
Training and Promotion :smiley:
Internal auditors should go through the necessary training, to enhance knowledge, skill and competencies of internal auditors and to keep these auditors updated with the developments in internal auditing.
Internal auditors should be exposed to both hard skills (such as basic internal auditing skills, audit sampling, risk management, risk analysis and control) and soft skills (such as business communication, analytical thinking and problem solving).
Key performance indicators (KPIs) is used as one of the evaluation procedures, where a balance scorecard is used to brings benefit to both management and internal auditors.
Internal Audit
Charter :star:
A formal document that defines
internal audit's purpose, authority,
responsibility and position within
an organisation.
It may also be known as terms of
reference.