How Can Internal Audit Report Effectively to Its Stakeholders?

by Andrew Cox for Qfinance, August 15th, 2011.

Executive Summary

  • Internal audit has a range of stakeholders who rely on its work, seeking assurance that the organization is running well and that there are effective controls in place.
  • Internal audit has a responsibility to its stakeholders to provide reports on the operation of the organization’s risk management, control, and governance processes. It also has a responsibility to justify the value of its work and the organization’s spending on internal audit resources.
  • Internal audit can report on its work to its stakeholders by:
    • reporting on the outcomes of its internal audit work;
    • reporting on the quality of its internal audit work.
  • Together, these elements combine to provide stakeholders with an overall view of the effectiveness of internal audit; one without the other will only provide a partial reporting structure.

Introduction

Internal audit has a variety of stakeholders who rely on its work. These include: the board of directors; the audit committee; the chief executive officer; senior executives such as the chief financial officer, chief information officer, chief risk officer, etc.; the external auditors; in some cases, regulatory bodies; and stockholders—who, in the case of government organizations, could be the public.

All these stakeholders are seeking assurance that the organization is running well, and that effective controls are in place and operating properly. Internal audit has an important role to play in providing assurance to these stakeholders, but the trick is how to report the results of its work to them effectively. (continue reading… )

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