Executive Summary
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Internal auditing is widely promoted as a critical component in the governance of organizations. Yet many directors and top managers are concerned that they are not getting maximum value from this resource.
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Although in many organizations internal audit is under-resourced or under-qualified, the most common problem is that it is poorly used by the organization.
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Poor planning leads to application of internal audit activity in the wrong places and the delivery of irrelevant reports.
Introduction
Internal audit is an information service. Internal auditors do not—indeed, must not—make decisions for the managers of organizations. They are a highly skilled and expensive resource that exists to serve the best interest of the organization and yet, on the surface, they do not directly contribute to organizational performance. They examine processes and produce reports; they attempt to capture good practice and identify poor; and they design controls to address identified risks. It is the information they convey to the managers of an organization that makes internal auditors valuable.
Information is valuable when it is reliable and relevant. To be reliable it must be objectively based on evidence and well argued. The internal auditing standards provide the basis for the production of reliable information, as they require the application of appropriate techniques by suitably qualified individuals. Reliability comes from discipline and competence.
Relevance means providing information that is needed, when it is needed. Relevance can only be achieved by sound planning—planning that identifies the needs of the organization and enables the delivery of internal audit results at a time when they can be acted on. Planning is a process that must involve not only the professional input of the internal auditor, but also the strategic input of the board and top management of the organization.
Internal auditing will be ineffective if it does not ask, or is not asked, the right questions.
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