Internal audit – the third line of defence
AUDIT AND THE THREE LINES OF DEFENCE
Independent assurance is the critical third line of defence shown in Figure 3.1. It has two complementary parts – internal and external audit. In respect of risk, internal audit provides independent assurance to the board on the effective operation of the risk management framework and validates the risk measurement process. External audit’s role is to give an opinion on the financial statements. To enable it to do this, it has to assure itself of the quality ...