Corporate Governance and Ethics

Chapter 8

Internal Auditors' Roles and Responsibilities

INTRODUCTION

INTERNAL AUDITING FUNCTION AND CORPORATE GOVERNANCE

TREND AND RELEVANCE OF INTERNAL AUDITORS

AUTHORITIES AND RESPONSIBILITIES OF INTERNAL AUDITORS

INTERNAL AUDIT OUTSOURCING

AUDIT COMMITTEE RELATIONSHIP WITH INTERNAL AUDITOR

INTERNAL AUDITORS' ROLE IN INTERNAL CONTROL

INSTITUTE OF INTERNAL AUDITORS

DETERMINANTS OF EFFECTIVE INTERNAL AUDIT

SUMMARY

KEY TERMS

REVIEW QUESTIONS

DISCUSSION QUESTIONS

NOTES

INTRODUCTION

Internal auditing has evolved from a traditional appraisal activity to an objective, assurance, and consulting activity. Internal auditing is viewed as a value-added service that improves the organization's operations, risk management, internal controls, and financial reporting. Internal auditors' roles changed from merely providing input and objective feedback to management, to directly participating in corporate governance, and thus, in the decision-making function. The CAE is primarily responsible for managing, directing, and overseeing the internal audit function. The company's audit committee is directly responsible for hiring, compensating, firing, and overseeing the work of the CAE. This chapter discusses the role of internal auditors in corporate governance.

Primary Objectives

The primary objectives of this chapter are to

• Understand the importance and value-added nature of the internal audit function.
• Review the qualities of an effective internal audit department.
• Discuss the role of internal ...