ACC621 Midterm review
Internal auditing is an independent objective assurance and consulting acitivity designed to add value and improve an organizations operations. Adding value is provided by improving opportunities to achieve organizational objectives identifying operational improvement reducing risk through exposure through both assurance and consulting. Auditing has its key components
- accomplish objectives
-evaluate and improve effectiveness of risk management
-assurance and consulting activity designed to add value improve operations -independence and objectivitiy
-systematic and disciplined approach.
Strategic objectives- pertain to value creation management makes on behalf of shareholders. Longterm strategies look into the future management plans like increasing market share Operation objectives- being effective and efficient in organization objectives performance, profit goals all short term goals reporting- being reliable of the reporting to be sufficient
compliance- following the applicable laws and regulations
Internal auditors have objectives that help business objectives reach their goals Governance is a process by the board of the directors to authorize direct and oversee management to achieiving the organization's objectives. Along with objectives comes risk which affects achievement of objectives Control is in risk management is a process conducted to mitigate risks to acceptable levels. Independence and objectivitiy are both important. It deals with being free from conditions that threaten your objectivity that could manipulate how you make decisions, like pressure from management. Objectivity is an unbiased mental attitude oe bas when performing duties like having a third party auditor and not your brother audit your company's work. From a systematic and discpliined stand point, planning engagement, performing enagagment, and communicating engagement. Planning deals with understanding the customer, setting objectives and so forth, performing applies the procedures in auditing. And finally communicating involves, being consise clear, constructive and deliverying the knowledge to the company so they are aware of what is going on. Accounting deals with financial reporting measurement and communcation of business events and auditing reviews these measurements and is critical, investigative, and concerned if these approachs are done in an effective and legal matter. it involves a lot of analytical execution. The US Sarbane-s Oxley Act of 2002 requires US public companys to have independent outside auditors. This makes the audit work more reliable and trustworthy for users to trust the company's work when making decisions. Modern Internal Audit services need to be effective reliable, prevent losses in company and comply with organizational policies. Now adays internal auditors are becoming external and hired externally or outsourced. Co sourcing means having some of the audit duties in house and some outside. With regards to professional guidance the International Professional Practises Framework IPPF has category 1 mandatory guidance which is required in internal auditing and category 2 strongly reccomended guidance- which is practises for effective implementation of IIA standards. Audting comes down with experience more so importantly. Competencies include personal qualities and skills - integrity, passion, work ethic, curiousity, creativitiy, iniative, flexibility,. Education is a start to gain the knowledge but eventually hands on experience needs to be attained including communcation skills and develop analytical skills to think more critcally. Chapter 2
Standards in any profession is important the Institute of Internal Auditors has 5 general and 25 specific guidelines. The international professional practices framework have key components Definition, International standards, code of ethics, position papers, practice advisories, and practice guides Definition: Internal auditing is...
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