Hi! I want to analyse the interractions between audit committee, internal audit and external audit in the limited companies. The board of directors and the supervisory board are the internal Organs while the external Auditor is an external organ of limited companies. Please could you tell me if it is possible to consider also the internal audit as an internal organ?
Thanks!
Internal Audit is part of management of the company, purposesly for internal checks, internal controls and finally internal audit. They report to the board but they are typical employees of the company under the supervision of CEOs, unlike External Auditors
The internal audit function has two components a) as internal organ, to give administrative guidelines in all of its components and the entire structure b) as part of the board of directors, from the point of view subordinate, that is to say they cannot work externally as they receive orders of the administration; therefore, the internal audit department, is responsible for optimizing all the resources of the organization to achieve the objectives planned by the administration.
Dear Nadine
internal audit is not considered a component, since this is an activity delegated by the administration, and therefore does not have the status of a consultant.
Internal Audit is responsible for checking, channeling and energize the entity's resources, with the aim of achieving the objectives planned by the administration, as you see, depends on the same administration and not as an activity external to the organization.
Internal Audit is very important for the firm. We can consider it as a part of management of the firm. However, the audit system must be independent to ensure the relevance of audit reports and the transparency of the missions performed.
Dear Nadine,
internal auditors report to the board of directors, but they aren't members of such body.
Internal auditors are independent from both the board and management, because they are expected to review the firm's activities, procedures, internal control and risk management system designed and implemented by directors and managers.
Based on the results of their checks, internal auditors should provide suggestion to the board. The board is free to accept and follow the suggestion, or to reject it: only the board is responsible. However, if the board has accepted to implement the suggestion, the internal auditors should follow it up.
Despite the name, internal audit could even be exercised by external experts: this should strengthen the independence of auditors.
please read this article. maybe you can find something. in Colombia, There is a discussion about nature of "control de fiscalización" and "control de auditoria".
Article FISCALIZACIÓN; GÉNESIS Y CONTRADICCIONES EN SU PRÁCTICA SOCIAL
Please check the following article of mine. It talks specifically about this topic. There are also other similar articles about audit and corporate governance in general, you may want to check them out.
Al-Baidhani, A.M. (2016). The Nature of a Dynamic Relationship between Audit Committee and Auditors, both Internal and External. Business and Economics Journal, 7, 1-5.
Functionally, internal audit is one of the departments/ units in a company while audit committee is one of the subcommittees to the board. While both are requirements of best corporate governance practice, internal audit is internal function whereas audit committee can be entirely composed of outside members. In term of relationship, Chief Internal Auditor in some companies is a member of the audit committee, that is where company law defines. Structurally, internal staff report to Chief Internal Auditor who in turn reports to Audit committee and the Chairman of Audit committee to the board. Refer to the latest articles from ACCA on corporate governance. Thanks.
Hello, of course the internal audit is an internal body, because it responds to the objectives set by the organization and also ensure compliance with the goals of the company.
i think internal audit is an important role in the organization, I think internal audit members should not be only from inside organization, but also outside - it can consist of many members to meet the internal audit objectivity and independent
Internal Audit is an internal organ of a company or an organization.The role of internal audit is to provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively. Practitioners have a professional duty to provide an unbiased and objective view, independent from the operations they evaluate and report to the highest level in an organisation: senior managers and governors. Typically this is the board of directors or the board of trustees, the accounting officer or the audit committee. It has the primary responsibility of preventing errors and fraudulent occurrence and ensure that there is value for money.
Yes you can consider that internal audit function is an internal organ within a company's organizational structure if we take this from a corporate governance perspective or quality control characteristics. It is important to assess the function of the internal audit as one of the important and significant element of monitoring within the corporate governance arena and without such function audit committee cannot perform their job well. This is in addition to the need from an honest BOD to the effective role of the internal audit function