Internal Audit

Topics: Auditing, Internal audit, Audit Pages: 58 (15117 words) Published: May 16, 2012
Course Schedule

Course Modules

Review and Practice

Exam Preparation


Module 1: Introduction to internal auditing
The first module in this course sets the stage for your study of internal auditing (also known as “management auditing”). You consider the definition, development, and scope of internal auditing. You also consider the business environment and identify and analyze its accompanying risks. The various types of internal audits and the relationship between internal auditing and performance measurement are explained. Finally, you study the role of professional ethical standards in internal auditing and review case analysis, a technique used frequently throughout this course.

Test your knowledge
Begin your work on this module with a set of Test-your-knowledge questions designed to help you gauge the depth of study required.

Learning objectives
1.1 Definition of internal auditing Define internal auditing and explain the key terms used in the definition. (Level 1)


Scope of internal auditing Describe the three elements that determine the scope of internal auditing. (Level 1)


Functions of management Explain the main functions of management and how they relate to achieving control. (Level 2)


Enterprise risk Define risk and enterprise risk, and explain how they are related to the concept of control. (Level 1)


Role of the internal auditor Explain the role of internal auditors in their organization, and compare it with the role of the organization’s external auditors. (Level 1)


Types of internal audit assignments Describe the types of audits carried out by internal auditors. (Level 1)


Performance measurement Compare internal auditing and performance measurement. (Level 2)


The ethical climate Outline the role of the internal auditor in promoting ethical culture and standards in an organization. (Level 1)


Ethical considerations Apply ethical judgments in the context of the internal auditor’s work. (Level 1)

1.10 Introduction to case analysis Prepare a case analysis report from information provided on an internal auditing issue. (Level 2)

Module summary Print this module

Course Schedule

Course Modules

Review and Practice

Exam Preparation


1.1 Definition of internal auditing
Learning objective

Define internal auditing and explain the key terms used in the definition. (Level 1) Required reading

Reading 1-1, Tomorrow’s Internal Auditor Reading 1-2, The Auditor as Internal Consultant LEVEL 1

Auditing terminology
In industry, two terms referring to the work of internal auditors are used somewhat interchangeably: “internal auditing” and “management auditing.” For the most part, these terms have the same meaning; however, internal auditing is the more widely-used term. Occasionally, the term management auditing is still used to stress that the scope of internal auditing extends well beyond financial and compliance auditing into all areas of management . Sometimes, the term operational auditing is also used to refer to management auditing. In this course, operational auditing refers to the auditing of attributes related specifically to effectiveness, efficiency, and economy.

Internal auditing defined
In June 1999, The Institute of Internal Auditors (IIA) — the international professional association for internal auditors — revised its definition of internal auditing: Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.1 Consider the meaning of some of the terms found in these definitions2 : Independence is freedom from conditions that threaten the ability of the internal audit activity to...
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