Internal Auditor Roles in

Corporate (Organization)

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Internal Audit’s Management
Focus
 Mission of Internal Audit  Service
to the overall of organization
 Major concern  Management
Effectiveness
 Internal Auditors must understand
management needs
 To form a partnership relationship

March 18th, 2003 taufikurRahman

What is Management
 Management is the process of achieving
the effective utilization of resources
 Functions of Management
 Planning (include Budgeting)
 Organizing (include Coordinating)
 Staffing
 Directing
 Controlling (include Reporting)
 Additional Functions of Modern Manager
 Innovating
 Representing
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Nature of the Organization
Environment
 Economic factors
 Competitive factors
 Technological factors
 Political factors
 Social & Environmental factors

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 Attributes of Management
 Dependence on people
 Focus on decision-making
 Effect of risk level
 Management is judge by results
 Time span for appraising results

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Understanding Our Own
Management
 Developing Communication Links with
Management
 The Audit-Planning Process
 Establishing Effective Communication Channels
 Audit Results Communications
 Alternative Approaches for Developing
Expertise
 Actual experience as a worker on the job
 Observation the operation

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 Form a Link with
Management
 Form a partnership with all management
levels
 Provide basic audit protective services
 Continuously alert to use its independence to
identify, evaluate, and support issues of
significant management interest
 The capacity to interface in a persuasive manner
 Avoid the inherent temptation to use their
potential power with management or auditee
 Respect given at all times for the responsibility
that managers have

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Serving the Audit
Committee
Audit Committee Organization
 An Audit Committee consists of members of
the board of the organization who
understand, monitor, coordinate and
interpret the internal control and related
financial activities for the entire board.
 The roles:
 Overview of completeness and integrity of
financial statements
 Overview of the effectiveness of the internal
control systems
 Overview of the adequacy of the total audit effort
Audit Committee Organization
 Membership
 Consist of outside directors
 Consist of 4 or more board members

 Meetings
 About same time as the formal board of
directors meetings
 Operating Styles
Audit Committee Responsibilities
 Contributes to attain the organization’s
objectives
 Reviews and approvals of an internal audit
charter
 Selects and Dismisses of the director of internal
audit
 Approvals of internal audit plans and budgets
 Provides guidance on where internal audit should
focus its review activities
 Nominate the organization’s external auditors
 Acts as a “court of last resort”
 Internal Audit Services to
the Audit Committee
 Mainly as “eyes and ears” of AC
 Participate in audit committee meetings
 Periodic reports to audit committee during the year
 Advise the audit committee in nomination of
external auditors
 Perform special assignment from the audit
committee
 Maintain open communication with the chairman of
audit committee
 Provide reports relating evaluation of internal audit
services
 Alternative
Audit Committee’s Responsibilities
 Determining and reporting the status of company’s
internal control
 Recommending in selecting external auditor
 Approving an annual audit plan submitted by external
auditor
 Approving the appointment of the Director of Internal
Auditing
 Approving the annual internal audit plan and
recommendation
 Reviewing and distributing the audited financial
statements
 Initiating appropriate actions based upon any
recommendations by external and internal auditor