Monday, September 5, 2016


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            Internal auditors have always been seen as the policeman guarding an organization.  Trends and development today dictate that there is a need for the profession to transcend its traditional scope and move towards greater heights, assuming the strategic role of corporate governance partner within an organization.
            In the wake of corporate scandals such as Enron, and Parmalat, the role of internal auditor has significantly expand from its traditional function of control checker to governance partner.  The profession need to move forward from performing financial compliance.  They need to work closely with the other governance partners in the organization.
            Good corporate governance can be achieved with the coming together of the “Four Cornerstones of Corporate Governance which comprises of:
1.      The board
·         Which provides leadership in governance through audit committee.
2.      The line function
·         Headed by CEO and his senior management learn.
3.      The external auditor
·         Play a crucial role in understanding the governance structure.
4.      The internal auditor
·         Tq work closely with the three other governance partners to understand where the business control risk is within the organization.
Internal auditors must be at the forefront, working very closely with line managers and across the organization in order to establish a sound internal control structure.  There exist 3 levels of responsibilities in achieving this:
1.      The business unit that  builds and establish internal control and risk framework
2.      The oversight manager who are expected to perform close monitoring on the governance structure within business units.
3.      The internal and external and who provide independent assurance.
Some internal audit department take the stand that they do not want to be involve in level 1 and 2 work as they say that would impair independent.  In any case, the internal auditors have the cross functional and business experience that enable them to understand where the business risks are and are able to jointly design a good internal control structure.
Internal audit must realign priorities to reflect merging needs of the audit committee and board as well as respond to ward all the needs of stakeholders.  They also must have a strong link to the CEO and board to elevate its authority and visibility.  Internal audit must build a continuous improvement process to bolster the quality and productivity of the function through an effective Human Capital Management Strategy.
It’s not all that simple to become an internal auditor.  Having been an external auditor does not necessarily pave the way for an easy conversion process to becoming an internal auditor.  It is a different ball game because:
·         Of the different sets of skills required
·         Need to better understand of financial governance
·         It requires strong influencing, relationship, communication and also behavioral management skills.
·         The higher need for forensic accounting

Shared from article by:
                  Anuja Ravendran
                  Interviewing Wee Hock Kee
President of the institute of Internal Auditors Malaysia (IIAM) (2005)
Accountants Today, May 2005

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