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Internal audit

Introduction

1.1 Definition

 Internal audit is ‘an independent appraisal activity established
within an organisation as a service to it. It is a control which
functions by examining and evaluating the adequacy and
effectiveness of other controls’. (CIMA)

1.2 Context – management review of controls (Turnbull)

 A review of internal controls should be an integral part of management’s role.

 The identification, evaluation and management of all key risks facing the
organisation.

 The effectiveness of internal control – financial, operational, compliance and
risk management controls.

 Communication to employees of risk objectives with targets and performance
indicators.

 The action to be taken if any weakness is found.

1.3 Internal audit vs. risk management

Internal Audit Risk Management

 Testing and evaluating controls  Own entire risk management
process
 Special investigations as
directed by management  Maintain risk register

 Support and assist senior  Lead in developing risk
management in projects, some response strategy
outside risk management arena
 Provide training and
 Contribute to risk identification development in risk
management matters

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