Professional Documents
Culture Documents
CHAPTER 1
INTRODUCTION TO INTERNAL AUDITING
LEARNING OBJECTIVES:
1. To obtain a basic understanding of Internal Auditing and Internal Audit
Process.
2. To differentiate auditing from accounting
3. To differentiate the financial reporting assurance provided by the external
auditor with the internal auditor.
4. What competencies that are needed to excel as an internal auditor
5. What are various career waiting for Internal Audit graduate?
PRELUDE:
To understand fully well what is Internal Auditing all about, let us first
define and know the detailed meaning of Internal Auditing
What pops into your mind if you hear Internal Auditing?
In layman words, what is the term mean to you?
Many think that Internal auditing is a boring branch of accounting
Some think that internal auditor does a police function in the
organization, where they check the others work and report their
mistakes
They are all wrong because Internal Auditing is very exciting job and
demand is very high nowadays.
Most of promotions in the corporate world come from the Internal
Audit Department.
What do you think are the reasons?
Because Internal Auditors are trained to be objective and independent.
They are molded to be honest in their work and think about the
company more than their self interest.
They are also expert in all aspect of business and finance matters.
2. Objectivity
auditor must be able to make impartial and unbiased mental attitude in
performing their task
quality of job must not be compromised .
should not be involved in the day to day operation or put themselves in
situation when theres conflict of interest
RULES : logically, if an auditor is transferred to another department, he
should audit that department for 1 year REASON : hes auditing his own
work
What are the two types of services that the Internal Auditors are catering?
1. ASSURANCE
to assess evidence relevant to subject matter of interest
to provide conclusion based on study of the evidences.
2. CONSULTING
giving advice and other assistance the management may seek
Who works for the governance processes and who works for the risk
management and control?
Governance is the task of the board of directors they authorize, direct, and
oversee management team toward the achievement of the companys objective
Risk management and control are tasks assigned to Management Team
Risk Management how to deal with uncertainties that could affect the
attainment of objectives
Control how to mitigate, lessen, and diminish the risks to acceptable level.
1. STRATEGIC
how the management plan to achieve certain objective
Strategies are approaches, tactics, policies, and actions how they will carry out
their plans.
Example: Objective is how to increase market share?
2. OPERATIONAL
refers to the efficiency and effectiveness of the operations
this includes the performance and profitability goals
also pertains to how resources be safeguarded from loss
Example: Objective is how to shoot up profit from 20M to 50M this year
3. REPORTING
refers to the reliability of internal and external reporting FS
report is the basis of decision that the management will carry out for their
objectives.
Hence, reports should be dependable, trustworthy, and timely.
Example: Daily Cash Report
4. COMPLIANCE
refers to adherence to applicable laws and regulations
Management and its staff must abide and act in accordance with the provisions
( SOP ) set by the TOP management.
Example: Remitting SSS and other governmental compliance
3. Work ethic Work smart and work hard to get things done
7. Flexibility embraces change and adapt quickly to new situation and changes.
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