Internal auditing is a management-oriented discipline that has evolved rapidly since World War II. Once a function primarily concerned with financial and accounting matters, internal auditing now addresses the entire range of operating activities and performs a correspondingly wide variety of assurance and consulting services. By definition, according to Institute of Internal Auditors (IIA), internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditing is executed by an internal auditor. He is regarded as part and parcel of the organisation since his/her appointment is usually effected and influenced by the organisation’s management. His/her activities are defined by the recruiting organisation, though there are basic issues that are expected to be addressed by him/her during the course of his/her tenure in office. This paper, therefore, attempted to unveil the issues surrounding the internal auditor’s functions within an organisation. As such the paper dwells on the definition, duties, responsibilities, relationships, ethics, and independence of an internal auditor. In doing this, both the international and local requirements, where different, regarding the functions and operations of an internal auditor are considered.
DEFINITION OF INTERNAL AUDITOR
Many definitions have been forwarded for internal auditor. The following are some of them: •
The Institute of Internal Auditors (IIA) defines an internal auditor as an individual within an organisation's internal auditing department who is assigned the responsibility of performing internal auditing functions. •
Internal auditor is an accountant who reviews the accounting procedures, records, and reports in both the controller's (somebody whose job is to oversee financial matters in a business or government department) and treasurer's (somebody who manages the finances of a government, organisation, or corporation, usually the chief financial officer) areas of responsibility. •
Internal auditor is an auditor who is an employee of the company/organisation whose records are audited and who provides information to the management and board of directors. From the above definitions, internal auditor has the following features:
He/she is an employee of the organisation.
His/her appointed is effected by the organisation’s management.
He/she is an information provider.
His/her responsibility is to perform internal audit functions. However, internal auditors are not expected to have knowledge equivalent to a person whose primary responsibility is to detect and investigate fraud/abuse (i.e. external auditor). Also, auditing procedures alone, even when carried out with due professional care, do not guarantee fraud/abuse will be detected. DUTIES AND RESPONSIBILITIES OF AN INTERNAL AUDITOR
Whereas the duties and responsibilities of an external auditor are stipulated in the Companies and Allied Matters Act, No. 1 of 1990, the duties and responsibilities of the internal auditor depends on the size and technology of the organization. A. Main Duties of an Internal Auditor:
The internal auditor shall:
Execute a wide range of audits and reviews in a diverse and highly computerised organisation; 2.
Provide an independent, objective assurance and consulting service to management, with the principal aims of evaluating and improving the effectiveness of risk management, control and governance processes; 3.
Make recommendations on increasing operational efficiency, having regard to value for money auditing; 4.
Agree the annual audit plan with the Chairman prior to approval by the Audit Committee; 5.
Report quarterly and as requested to the Audit Committee...
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