The Council of the Malaysian Institute of Accountants has approved this Guideline for publication. These guidelines have been adapted by the Internal Audit Committee of the Malaysian Institute of Accountants from the publication "Guidance for Internal Auditors" issued in June 1990 under the aegis of the Consultative Committee of Accountancy Bodies (CCAB) in the United Kingdom. These guidelines provide advice to internal auditors on the main issues and procedures which they need to consider as part of their work in both the commercial and public sectors. They should also be of benefit to organisations considering establishing an internal audit function. Internal auditors should read these guidelines in conjunction with the Approved Auditing Standards contained in the Members' Handbook and the Institute's By-Laws (On Professional Ethics, Conduct and Practice) [Issued January 2007] and any requirements regarding internal audit set out in the relevant statutes or regulations. These guidelines are intended to be persuasive only.
A glossary of terms used in these guidelines are given in the appendix to the guideline. :: OBJECTIVES AND SCOPE OF INTERNAL AUDIT ::
1. Internal audit is an independent appraisal function established by the management of an organisation for the review of the internal control system as a service to the organisation. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic and effective use of resources. 2. The essentials for effective internal auditing are:
The internal auditor should have the independence in terms of organisational status and personal objectivity which permits the proper performance of his duties (paragraphs 11 to 14).
(b) staffing and training
The internal audit unit should be appropriately staffed in terms of numbers, grades, qualifications and experience, having regard to its responsibilities and objectives. The internal auditor should be properly trained to fulfil all his responsibilities (paragraphs 15 to 26).
The internal auditor should seek to foster constructive working relationship and mutual understanding with management, with external auditors, with any other review agencies and, where one exist, the audit committee (paragraphs 27 to 37).
(d) due care
The internal auditor should exercise due care in fulfilling his responsibilities (paragraphs 38 to 44).
(e) planning, controlling and recording
The internal auditor should adequately plan, control and record his work (paragraphs 45 to 58).
(f) evaluation of the internal control system
The internal auditor should identify and evaluate the organisation's internal control system as a basis for reporting upon its adequacy and effectiveness (paragraphs 59 to 62).
The internal auditor should obtain sufficient, relevant and reliable evidence on which to base reasonable conclusions and recommendations (paragraphs 63 to 69).
(h) reporting and follow-up
The internal auditor should ensure that findings, conclusions and recommendations arising from each internal audit assignment are communicated promptly to the appropriate level of management and he should actively seek a response. He should ensure that arrangements are made to follow up audit recommendations to monitor what action has been taken on them (paragraphs 70 to 78).
3. The terms of reference for the internal audit function should be formally confirmed by the organisation and should have proper regard to the contents of this guideline; demonstrable independence of the function is crucial to its effectiveness.
4. For certain public sector organisations the need for an internal auditing function is prescribed by statute and this provides a basis for defining specific standards and guidance for the practice of internal auditing in these organisations.
5. To achieve full effectiveness the scope of the internal audit function...
Please join StudyMode to read the full document