1. internal audit and corporate governance

1. INTERNAL AUDIT AND CORPORATE GOVERNANCE

EXECUTIVE SUMMARY: Internal audit assists management in achieving its objectives and complying with corporate governance. Best practice for internal audit is to report to both audit committee and the board It is vital to assist the need for internal audit first and then decide to implement this function or not. This evaluation is carried out by audit comittee Internal audit assesses and monitors the day to day work. Its head management – audit committee, that reviews the work done by internal audit and connects it external audit and the board

1. 
   INTRODUCTION
   

What is internal audit?
Internal audit function – a function of an entity that performs assurance and consulting activities designed to evaluate and improve the effectiveness of the entity’s governance, risk management and internal control processes implemented within the entity.
What else does it do?
-Monitor the work done by management and assess it
- Assist management in achieving corporate objectives
Why do we need internal audit?
Established codes of corporate governance highlight the need for businesses to maintain good systems of internal control.
Internal audit is one the best means of maintaining internal control.
How can internal audit assist the board ?

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  By acting as auditors for board reports not audited by external auditors
  
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  Being the experts in fields of accounting and auditing, helping with implementing new standards
  
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  Liaising with external auditors
  

How audit committee and internal audit are connected?
When an internal audit function exists, the committee will review and approve the audit plan, review staffing and organization of the function, and meet with internal auditors and management on a periodic basis to discuss matters of concern that may arise.
The audit committee’s role also includes:

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  Monitoring and reviewing the effectiveness of internal audit
  
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  Assessing the need for internal audit function if one doesn’t exist (note 1)
  
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  Explaining in the annual report the absence of internal audit function
  

Note 1. Assessing the need for internal audit

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   The cost of setting up the internal audit vs the benefits from it
   
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