Content area
Full text
Challenges, Responsibilities, and Implementation
The field of internal auditing has transformed significantly over the past decade. Several factors have contributed to this change, including the increased complexity of a globalized marketplace, high-profile fraud and corruption scandals, new laws and regulations, and increased demand from stakeholders for greater assurance. (See Exhibit 1 for some specific shifts that have occurred with respect to internal auditing.) Within the profession, internal auditing serves as a corporate conscience and guiding force that helps to ensure that business decisions and management operations remain consistent with an organization's mission, strategies, and goals.
Given the continually changing climate, auditors must take on additional responsibility to aid organizations in managing risk. Exhibit 2 highlights key qualities that internal auditors should possess. Although internal auditing presents certain challenges, businesses should strive to implement an enterprise-wide internal audit system mat takes advantage of the advice provided below.
Adding Value
The Institute of Internal Auditors (IIA) defines internal auditing as "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" (http://www.theiia.org/ theiia/about-the-profession/intemal-auditfaqs/?i=1077).
Internal auditors would do well to frequently revisit this definition and ask themselves several related questions: Is our internal audit department designed to add value? Are our internal audit processes systematic and disciplined enough to sustain that value? Are we willing to change areas that need change?
To truly add value to an organization's operations, internal auditing has to remain relevant to stakeholders, such as management and the board of directors. Internal auditors are the eyes and ears of the organization, and they can constructively improve the entity's risk management and internal control processes, while also providing assurances as to the effectiveness and efficiency of these processes and management operations. When properly designed, internal audit activities can significantly improve the business as a whole.
Emerging Concerns
Although internal auditors often report to management and the board of directors, they are generally accountable first to their company's audit committee. The following sections present some of the key concerns of audit committees that internal auditors should keep in mind.
Risk assurance and governance. Although...