2010_F8_CH5_internalaudit

2010_F8_CH5_internalaudit - PartBinternalaudit...

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Part B internal audit 5 internal audit 
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2 5 internal audit Topic list 3 scope of IA function 4 IA assignments 5 internal audit reports 6 outsourcing of IA function Study guide
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3 1 internal audit and CG 1.1 introduction Key term:  IA is an  appraisal or monitoring activity  established  within an entity as a service to the entity. It function by … examining, evaluating and reporting  to… on the  adequacy and effectiveness  of components of … systems IA is generally a feature of  large  companies, to  assist M in achieving  corporate objective Mission statement Strategic plan
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4 1 internal audit and CG 1.2 IA and CG IA play a key role in assessing and monitoring IC Assist the board in other way: Acting as  auditors  for board reports… Being the  experts EA can use IA work and  reduce  the time and therefore  cost of EA To IA, audit committee be required: monitor and review the  effective of IA Where there is not IA function, consider annually whether there is a  need …and make a  recommendation  to the board Where there is not IA function,  explain  in annual report the  absence  
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5 2 distinction between IA and EA Similar: techniques Different: basis,  reasoning The whole basis and reasoning of IA work is fundamentally different to that of  EA work Key differences:  IA EA objective Add value  and  improve … operations reporting BOD, AC… ; are private scope …the operations … relationship Often employees, sometimes  outsourced Planning and  Strategic  long term  planning;  no materiality   level; may be  procedural ; evidence from 
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2 distinction between IA and EA 2.1 regulation of internal auditors Internal auditing is not regulated … There are no legal requirements… The scope and nature of IA work is more likely to be  set by company policy… Internal auditors are not required to be member of … IIA: “Standards for the professional practice of internal auditing” Code of good practice
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7 3 Scope of the IA function 3.1 business risk Risk of fulfillment of the company’s objectives  Key term: BR is a risk …adversely affect an entity’s  ability   to  achieve  its objectives  and  execute  its strategies, or  from  the  setting  of inappropriate  objectives and strategies.
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8 3 Scope of the IA function 3.2 the role of IA IA department has a two-fold role in relation to RM Monitor overall RM  policy Monitor the  strategies  implemented IA has a key role in  assessing systems
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This note was uploaded on 06/21/2011 for the course MGMT 202 taught by Professor Yan during the Spring '11 term at Nanjing University.

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2010_F8_CH5_internalaudit - PartBinternalaudit...

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