CFO Service

Roles and Responsibilities of Internal Auditor

Internal auditing means a self-governing, objective assurance and consulting activity designed to add value and improve an organization’s operations.

What is Internal Audit?

• As defined by Institute of Internal Auditors, Internal Audit an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
• The internal audit activity helps an organization achieve its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
• An Internal Audit must provide an unbiased and objective view.
• The internal audit activity must have qualified, skilled and experienced people who can work in accord with the Code of Ethics and the International Standards.

Appointment of Internal Audit:

The companies have mandated such class of companies to appoint an internal auditor. The appointment shall be made by the provisions Companies Act^[1].

Why is internal audit important to an organization?

• The internal auditor supports executive management and boards to determine that they are managing the organization effectively on behalf of their stakeholders. This is summarised in the mission statement of internal audit which says that internal audit’s role is to enhance and protect organizational value by providing risk-based and objective assurance, advice and insight.
• The internal auditors, along with executive management, non-executive management, and external auditors are a critical part of the top-level governance of any organization.

Roles and Responsibilities of Internal Auditor:

Internal auditors work varied from the function to function. Below are some key areas of auditing:

• Assessing the management of risk:
  

The internal auditor shall evaluate an organization’s management of risk. All organization faces various risks; the auditor shall analyze the same. Since the success of any organization depends on how they manage those risks effectively. The auditor shall assess the risk management processes, systems of internal control and corporate governance processes, across an organization.

• Assisting management in the improvement of internal controls:
  

The internal auditor helps management in improving organization practice. If a manager is concerned about a particular area of responsibility, the internal auditor can help to identify improvements.

• Evaluating controls and advise all level managers:
  

The range of internal audit’s role in evaluating the management of risk is wide since from the mailroom to the boardroom is involved in internal control. The internal auditor role is to evaluate the risk at one level to report on the effectiveness of the implementation of management policies at another.

• Evaluating risks:
  

The Management shall identify all risks affects the organizations’ growth which in return helps an internal auditor anticipate possible future concerns and opportunities providing assurance, advice, and insight where it is most needed.

• Analyzing operations and confirm information:
  

Accomplishing objectives and managing valuable organizational resources requires systems, processes, and people. Internal auditors work closely with line managers to review operations then report their findings.

• Working with other assurance providers:

Providing a guarantee to executive management and the board’s audit committee that risks are being managed effectively is not the exclusive domain of internal audit. There are likely to be other assurance providers who perform a similar role.

Responsibility:

• The internal audit shall attend the meetings with an understanding to develop the business process.
• Shall Travel to the different sites to get all information from various staff members.
• Shall provide ad hoc advice and guidance to managers and staff at all levels.
• Shall provide support and guidance to management on how to handle new opportunities.
• Shall manage a variety of stakeholders and their expectations through regular communications.
• Shall assess how well the business is complying with rules and regulations and informing management whether any issues need addressing;