Importance of This Chapter
The new controller may initially ignore any internal audit staff that her company may have. However, as this chapter points out, internal auditors can be an excellent resource for examining a variety of problems within a company. By understanding how this function works, the controller can use it as a resource to accomplish a number of key goals that she might not otherwise have sufficient staff to accomplish.
A key factor in the internal audit function is the manager to whom the function reports, since an incorrect reporting relationship can lead to skewed audit programs that avoid the areas supervised by that manager. Another issue is the objectives that the internal audit function should follow; too narrow a set of objectives may avoid reviews of key areas that are in serious need of help, while an excessively broad range of objectives will water down the department's ability to complete a reasonable set of target programs in a timely manner. A wide range of suggested activities for the internal audit staff are listed in this chapter, which are of use when determining a set of audit programs for the upcoming period. Finally, key factors are noted to consider when creating and maintaining a management system that provides an effective degree of control over the internal auditing staff. Thus, this chapter consists of an overview of the internal audit function, why it exists, what it does, and how to manage it.