What is an internal audit?
An internal audit is a key pillar of good governance. Governance refers to the processes and structures implemented by organisations to inform, direct, manage and monitor activities.
The Institute of Internal Auditors (IIA) lists the four pillars of governance as:
1. Audit Committee (Board)
2. Executive Management
3. Internal Audit
4. External Audit
An internal audit provides the board of directors, audit committee, chief executive officer, senior executives and stakeholders with an independent view on whether an organisation has an appropriate risk and control environment, while acting as a catalyst for a strong risk and compliance culture. Internal audit work is risk-based and encompasses both financial and non-financial operations. It is not limited to money. For example, in a healthcare organisation, there may an important role to review clinical governance.
Internal auditing is an important element in the governance and assurance environment, and a valuable tool to manage risk effectively. This applies to all organisations, including associations.
What does an internal audit do?
Internal auditing works to support the board of directors, audit committee, chief executive officer, senior executives and stakeholders.
The following questions are part of an effective internal audit:
How can an internal audit be implemented?
Internal auditing need not be costly or even full-time. Organisations should establish internal audit according to their size and requirements. This could be by determining what should be audited, the resources required to do this, and how much budget may be available. Depending on the size of the organisation, it could simply be a few days each month.
Resources may be obtained in a variety of ways:
Benefits
There are a number of potential benefits if an internal audit is implemented in an association:
Conclusion
Internal auditing is a service function that provides key stakeholders with a range of risk-based activities to assess whether an organisation is operating satisfactorily. Internal stakeholders include the board of directors, audit committee, chief executive officer and senior executives, while external stakeholders are shareholders and regulators.
An internal audit activity in an association can be cost-effectively implemented and provide significant benefits.
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