Topics: Auditing, Internal control, Internal audit Pages: 2 (637 words) Published: November 5, 2014

Week 5 Assignment
What is the correct relationship of internal audit to senior management? The correct relationship to exist between internal auditors to senior management is one that meets the risk areas as defined by importance to senior management; this includes assurance and consultative reporting result. The same premise is also true for creating a correct relationship with operational management and the audit committee; under these cases, operational management desires consultative results and the audit committee desires assurance results. How should conflict be managed? Is conflict inevitable?

Since internal auditors report to the three main groups of the company, it is expected for conflict to arise; each entity is looking for the auditor to modify the findings to suit the entity’s needs. For example, operational management is concerned with consultative results pertaining to the operational efficiency and adequacy of internal control mechanisms. Likewise, the audit committee is concerned with the assurance results pertaining to risk and control. Lastly, senior management is concerned with both areas of assurance and consultative results. In addition, conflict will also arise if the “audit activities performed by the internal audit differ in importance as perceived by management and the audit committee”; said audit activities in question include, but not limited to, are compliance, risk, accounting and financial risk, assessment of internal controls, evaluation of operations, and review of ethics and code of conduct. Difficult interpersonal workplace problems won’t disappear by ignoring them; they’ll only get worse. Chronic conflict-avoiders will end up losing the respect of their employees – and their own management (Lipman, 2013) In efforts to reduce conflict, the IIA recommends reports should be directed to the audit committee, board of directors, and/or other appropriate governing authority; “in this context, direct reporting means that the...
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