OVERVIEW OF INTERNAL AUDITING

History of Internal Auditing

Ancient Times
System of authorisation & verification by the Egyptian, Chinese
and Persians
Middle Ages
Expansion of the Italian commerce with better record keeping
( double entry )
Industrial Revolution
Scrutinizing records with documentary evidence
Recent Times
Accountability to investors
B/S audit & analytical approach to accounts

DEFINITION OF INTERNAL AUDITING

Old definition
Standards of Professional Practice of Internal Auditor:
Independent appraisal function established within an
organisation to examine & evaluate its activities as a service
to the organisation
Modern Internal Auditing
A systematic, objective appraisal by Internal Auditor of the
diverse operations & controls within an organisation to
determine whether:
Financial and operating information is accurate & reliable

DEFINITION OF INTERNAL AUDITING

- continuation
External regulations & acceptable internal policies &

procedures are followed

Risks to enterprise are identified & minimised
Satisfactory operating criteria are met
Resources are used efficiently & economically
Organization objectives are effectively achieved
all for the purpose of assisting members of the
organization in the effective discharge of responsibility

New Definition of Internal Audit

Internal

auditing is an independent,
objective assurance and consulting activity
designed to add value and improve an
organization operations. It helps an orgn
accomplish its objectives by bringing a
systematic, disciplined approach to
evaluate and improve the effectiveness of
risk mgt, control and governance
processes.

DIFFERENT APPROACHES TO
INTERNAL AUDITING
Comparative auditing
Encompass the audits of all activities within a
government entity

Management oriented auditing

reviewing all activities within the entity in order to help
managers to manage better

Participative auditing
Enlisting the aid of auditee in gathering data, evaluating
operation and correcting problems

Program auditing
Reviewing of entire programs for determining whether
desired benefits are achieved

DIFFERENCES BETWEEN INTERNAL &

EXTERNAL AUDITOR
Internal Auditor
Organisations employee
Serving
organisations

needs
Focuses on future events
Directly concerned with
prevention of fraud
Independent of audited
activities
Continuous review of
activities

External Auditor
Independent contractor
Serving 3rd parties
Focuses on historical

events
Indirectly concerned with
prevention & detection of
fraud
Independent
of
management and BOD
Periodic
review
of
financial statements

EVOLUTION OF INTERNAL AUDITING

Previous
Attesting accuracy of

Current
Examination

&
financial matters
appraisal of both
controls of public &
private entities
Junior to independent Distinctive discipline
accounting profession
Act as an auditees Act as a guide to

adversary

operations

THE INSTITUTE OF INTERNAL

AUDITORS
Mission:
to be the primary international professional association,
organized on a worldwide basis, dedicated to the promotion
and development of the practice of internal auditing.
Commitment:
Providing on an international scale, comprehensive
professional development activities, standards for the practice
of internal auditing & certification.
Researching, disseminating & promoting to its members & to
the public throughout the world, knowledge & information
concerning internal auditing, internal control & related
subjects

THE INSTITUTE OF INTERNAL

AUDITORS - continuation
Establishing meetings worldwide in order to

educate members & others as to the practice of

internal auditing as it exists in various countries
throughout the world
Bringing together internal auditors from all

countries to share information, experiences in

internal auditing and promotion education in the
field of internal auditing