Page 34 - ENGLISH MARCH final 2018

Frosting fundemantals TO COMMENT on the article,
EMAIL the author at ayshar_88@hotmail.com

By: Aysha AlShamsi Edited By: Assem Al Naser

The

Evolution &

Importance

of Internal

Audit

At the beginning, when companies started satisfaction theory states that there is a loans to the customers in order to increase
noticing an increased rate of Fraud direct relationship between customer’s their profits through the loan rate without
incident as result of lack of attention to the satisfactions and profit. even following the bank’s laws and
control environment and the weak design The internal audit function through regulations, which ended up with several
and effectiveness of internal controls in its disciplined approach enables the bankruptcy cases in the banking sector.
the organizations, it was really necessary management to understand the risk
to create “audit fieldwork” in the private profile of the various processes within Most of the board of directors are
and public sectors. Previously, the audit the organization, and with the properly mainly concerned with closing the audit
concept was difficult to comprehend as it designed audit procedures highlight comments without keeping in mind “how
was viewed as a control and monitoring control gaps, and ultimately mitigate can the comments not be repeated from
function. This continued until the modern controls through the recommendation to the sections?” Even if the comments are
management science started to develop enhance or introduce the right controls. repeated in future, most of them will
and the establishment of the Institute of However due to the inherent limitation of instruct the department to close it without
internal auditors in the early 1940’s. the the internal audit resources the internal noticing that it was the same comment
profession started to move from its policing audit functions are not able to cope with written in the previous report. I’m not
role into the advisory and business partner the all the operational risks that evolve as indicating that profit is not important, it is
role. This was followed by the development a result of the organizations operations, important and even auditors are checking
of many standards to govern and guide the Due to this inherent limitation, and in the financial statements in order to analyze
profession. In addition further alterations order to for the internal audit function to the revenue and costs. However, will the
to the definition of internal audit were fully assume its startegic roles within the profit levels achieved be sustainable if
made to properly position the profession organization the practices started shifting the organizations’ s control environment
within the organization and ensure that heavily from simply detecting errors and governance practices fails operate?
people start to realize the importance of to the assessmsnet of risk management And if that is the case, isn’t it suitable to
auditor and the internal audit function practices and that’s when the new embed the implementation of internal
became an integral part of the various definition of internal audit evolved to audit recommendations within the key
types of organizations. However, as the be an independent, objective assurance performance idicators of the operational
global financial crisis hits globally, board and consulting activity designed to add department. It is a question that needs
of director’s objective was to increase the value and improve an organization’s to be carefully thought of, and answered
organizational profit in order to avoid operations…” The word “adding value” by the executive management and might
bankruptcy. Even though some members has been identified and explained by many reshape the role of internal audit in the
of the board of directors were auditors. articles or auditors where it can increase future.
Therefore, organizations started to return the business profitability and reduce the
back to the old days were audit and control risks in the projects invested or resolve
processes were not that important as issues that are facing the organizations. Aysha Rashed AlHamrani AlShamsi
customer’s satisfaction should be the top in Giving the example of the banks before the Internal Auditor in Ajman Tourism Development
the organization concerns. The customer’s financial crisis where they were providing Department

32 INTERNAL AUDITOR - MIDDLE EAST MARCH 2018