What is internal audit?
The role of internal audit is to provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively.
What is its value to the organisation?
Internal auditors deal with issues that are fundamentally important to the survival and prosperity of any organisation. Unlike external auditors, they look beyond financial risks and statements to consider wider issues such as the organisation's reputation, growth, its impact on the environment and the way it treats its employees.
In sum, internal auditors help organisations to succeed. We do this through a combination of assurance and consulting. The assurance part of our work involves telling managers and governors how well the systems and processes designed to keep the organisation on track are working. Then, we offer consulting help to improve those systems and processes where necessary.
The difference between internal and external audit
While sharing some characteristics, internal and external audit have very different objectives. These are explained in the table below:
External audit Internal audit
Reports to shareholders or members who are outside the organisations governance structure. The board and senior management who are within the organisations governance structure.
Objectives Add credibility and reliability to financial reports from the organisation to its stakeholders by giving opinion on the report Evaluate and improve the effectiveness of governance, risk management and control processes. This provides members of the boards and senior management with assurance that helps them fulfil their duties to the organisation and its stakeholders.
Coverage Financial reports, financial reporting risks. All categories of risk, their management, including reporting on them.
Responsibility for improvement None, however there is a duty to report problems. Improvement is fundamental to the purpose of internal...