Audit Basics

In: Business and Management

Submitted By JeromeHarrell
Words 1006
Pages 5
Overview
The success of any companies’ internal audit function weighs heavily on the direction and tone provided by its Chief Audit Executive that operates within the organization on a daily basis. Stakeholders in a business must have confidence that the CAE of the internal audit function will work to make certain the interests of the stakeholders are top priority. The primary goal of the CAE is to sustain a level of objectivity and independence that ensures that public trust is not lost and value is consistently being added to the entity. Even with well-defined roles and responsibilities, issues may arise within management that requires attention and actions to be taken. Pat Goodly is an example of how even in a tightened governance structure, there still lies problems that should be addressed.
Position in the Organization
The internal audit function is created by the board of directors and the audit committee. Each individual that operates within the internal audit function including the CAE has their roles and responsibilities defined by the audit committee and board of directors. The primary purpose of the audit committee is to oversee the organization’s internal audit function, which plays a vital role in the aspects of corporate governance and risk management. The reporting environment in which the CAE operates in is discussed in Standard 1110. IIA Standard 1110 states that “the chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities.” The supplementary practice advisory, 1110-2, goes into more detail and provides a set of procedures to consider when applying the standard. The summary IIA Standard 1110 states that the CAE should report functionally to the audit committee, and should report administratively to the chief executive officer of the organization. A significant…...

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