The best reason for including an internal auditor is the internal auditors knowledge of
What is Internal Audit?Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Show
Performed by professionals with an in-depth understanding of the business culture, systems, and processes, the internal audit activity provides assurance that internal controls in place are adequate to mitigate the risks, governance processes are effective and efficient, and organizational goals and objectives are met. Evaluating emerging technologies. Analyzing opportunities. Examining global issues. Assessing risks, controls, ethics, quality, economy, and efficiency. Assuring that controls in place are adequate to mitigate the risks. Communicating information and opinions with clarity and accuracy. Such diversity gives internal auditors a broad perspective on the organization. And that, in turn, makes internal auditors a valuable resource to executive management and boards of directors in accomplishing overall goals and objectives, as well as in strengthening internal controls and organizational governance. Seems like a lot to ask from one resource? Maybe for some, but for internal auditors — it’s all in a day’s work. Definition of Internal AuditingAccording to the Definition of Internal Auditing in The IIA's International Professional Practices Framework (IPPF), internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal Audit Profession ResourcesFor newcomers to the profession of internal auditing as well as experienced practitioners who want to promote the profession and its role in the success of an organization, the following resources are ideal for elevating the profession, enhancing professionalism, and building awareness. For more information, contact . Downloads and LinksThe BasicsAll in a
Day's Work Adding Value Across the Board Frequently Asked Questions About the Internal Audit Profession For Governing BodiesValue Proposition: Internal Auditing's Value to Stakeholders The Value of Internal Auditing for Stakeholders The Audit Committee: Internal Audit Oversight Standards and ProfessionalismAuthoritative Guidance What Does it Take to Be a
Professional? Home > Resources > IIA Singapore Blog > Why Internal Audit? By Nicodemus Tan
Many years ago, when I was overseeing an internal audit function in China, one of my internal auditors came to me crying. Her colleagues had accused her of being a traitor to Singaporeans by “writing bad things” about them which caused them to be fired. My redacted conversation with her went like this:
It may not be an obvious link to the non-initiated, but a good internal audit team will always make a difference to the long-term survivability of a company. Think about two hypothetical identically profiled multinational corporations. One has a great internal audit function which helped reduce the risk of all processing errors to 0.1%, while the other had a residual error rate of 0.2%. This seemingly insignificant difference will become a ginormous mammoth one year down the road as error rates are multiplied and magnified by the millions of purchases, production, sales, HR transactions, etc. An effective internal audit function makes the difference between a management spending time constantly fire-fighting and a management spending time making strategic decisions. It is the difference between having disgruntled customers from poor sales order fulfilment and cross-selling or up-selling based on customer goodwill. It is also the difference between having a lack or oversupply of raw materials and an optimal stock level that minimises production downtime and inventory holding costs. When I returned to Singapore from that China stint, I had the opportunity to audit several major healthcare entities. My team was starting to do simple data analytics and was able to identify certain uncompleted diagnostic tests that should have been done months ago. This case clearly exemplifies that internal audit can make a major difference to the health and well-being of the human race in general! The internal audit profession has since furthered our cause. Instead of being a third line of defence, we have removed this mental restraint and have advocated a more active role in helping organisations achieve their objectives. By equipping ourselves with digital skills for the future and knowledge of emerging risks, we add value to management and the board by nipping the risks in the bud - asking the difficult questions and calling out any issues that we uncover. So, while internal audit isn’t a direct cure for cancer, nor does it command social respect with the likes of doctors or police officers, internal audit has helped put food on the table, and unsurprisingly fulfils many self-actualisation needs as described by Maslow. Overall, the value of internal audit has evolved and increased over the past 20 years. It may not be obvious to the common man in the street, and our internal audit utopia may still be some time away but we are definitely moving closer and closer! Nicodemus Tan is a Partner at Baker Tilly LLP, a Governor of The Institute of Internal Auditors Singapore, and a fervent believer that internal audit when done right will provide an immense competitive advantage to the organisation. The Institute of Internal Auditors Singapore blogs reflect the personal views and opinions of the authors. These views may differ from policies and official statements of The Institute of Internal Auditors Singapore and its committees and from opinions endorsed by the bloggers’ employers. What is the purpose of an Internal Auditor?An internal auditor (IA) is a trained professional employed by companies to provide independent and objective evaluations of financial and operational business activities, including corporate governance.
What is the most important contribution of internal auditing?The role of internal audit is to provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively.
Why is it important for an Internal Auditor to follow the standards of the internal auditing profession?The Standards, promulgated by The IIA, are the primary mechanism for ensuring an organization's internal auditors consistently and accurately provide essential services in a timely, cost-effective manner. The Standards also: Provide a framework for performing a broad range of value-added internal auditing.
What is the most important benefit of an internal auditing activity to management?Benefits of Internal Audit
Improves the “control environment” of the organization. Makes the organization process-dependent instead of person-dependent. Identifies redundancies in operational and control procedures and provides recommendations to improve the efficiency and effectiveness of procedures.
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