Get introspection.

Today, Boards and CEOs are looking at their IAF as a key strategic tool and expecting more out of IA. In a joint survey by KPMG’s Audit Committee Institute (ACI) with the National Association of Corporate Directors (NACD) in the United States, it was found that only 46 percent of audit committee members were very satisfied with their company’s IAF.

Audit committees and CEOs today are interested in knowing how they can position their IAFs to add value to the business that goes beyond regulatory compliance and assurance on internal controls. IA is also expected to lead the way in linking risk monitoring, compliance activities, continuing regulatory changes and the C – level agenda.

• Cover page ·
• Table of content ·
• Executive summary ·
• Background of the audit ·
• Methodology ·
• Purpose and scope of the audit ·
• Scope limitation (if any) ·
• Summary of Auditing observations ·
• Detail of audit observations and recommendations ·
• Conclusion ·
• Vote of thanks

• Increased size and complexity of business.
• Compliance of Statutory requirement.
• Use of Information technology on large scale.
• Internal controls for risk management.
• Establish sound corporate governance and use of best industry practices.

• Internal audit is an independent management function, in order to provide an unbiased and impartial report.
• It studies the existing internal controls and standard operating procedures with the objective of determining whether they are properly carried out.
• It helps in improving internal control structures and promote better corporate governance.
• It identifies threat and opportunities and designs controls to manage the risks and taking advantage of opportunities.

• Review operations, policies, and procedures and assist management in establishing better policies and procedures
• Certify risks being managed within acceptable limits as laid down by the Board of Directors.
• Examining and evaluating continuous effectiveness of the internal control system and making recommendations, if any, for improving internal control mechanism.
• Help the management in identifying frauds and preventing them.

An internal auditor is a person who performs internal audit. It can be an individual, partnership firm or a body corporate. An internal auditor can be a Chartered Accountant or Cost Accountant (whether in practice or not) or such other professional which the boards appoints to conduct internal audit of the functions and activities of the company.

An employee of a company can be appointed as an internal auditor provided he possess requisite qualification and abilities to perform internal audit.

Generally an internal audit involves following activities:

1. Internal auditor will establish and communicate the scope and objectives of audit to appropriate members of management.
2. He will develop an understanding of the business area under review such as its objectives, measurements, type of key transaction, interviews and review of documents.
3. He should describe the key risks in business activities that is within the scope of the audit to be conducted.
4. He must identify management practices to ensure that each key risk is properly controlled and monitored.
5. He must develop and execute a risk-based sampling and testing approach to determine whether the most important management controls are operating as intended.
6. He should report issues and challenges identified and discuss them with management to reach at some action plans to address those issues.
7. At the end, he must follow-up on reported findings at appropriate intervals to check whether any efforts have been made by the management. Internal Audit Departments maintain a follow-up database for this purpose.