INTRODUCTION TO INTERNAL
The IIA’s definition: “Internal auditing is an independent, objective, assurance and consulting activity
designed to add value and improve an organization’s operations.
It helps an organization accomplish
its objectives by bringing a systematic, disciplined approach to evaluate and improve effectiveness of
risk management, control, and governance processes.”
An organization’s objectives define
the organization wants to achieve.
management plans to achieve the objectives.
The four categories of business
objectives introduced in this chapter are:
objectives, which pertain to the value creation choices management makes on
behalf of the organization’s stakeholders.
objectives, which pertain to the effectiveness and efficiency of the organization’s
operations and include performance and profitability goals and safeguarding resources
objectives, which pertain to the reliability of internal and external reporting of
financial and non-financial information.
objectives, which pertain to adherence to applicable laws and regulations.
is the process conducted by the board of directors to authorize, direct, and oversee
management toward the achievement of the organization’s objectives.
process conducted by management to understand and deal with uncertainties (that is, risks and
opportunities) that could affect the organization’s ability to achieve its objectives.
, as defined
in this chapter, is the process conducted by management to reduce risks to acceptably low levels.
Please see the textbook glossary for separate definitions of control activities, internal control, and
system of internal controls.
involve an objective examination of evidence for the purpose of providing
an independent assessment on governance , risk management, and control processes for the
are advisory and related services, the nature and scope of
which are agreed to with the customer and which are intended to improve an organization’s
governance, risk management, and control processes without the internal auditor assuming
is the freedom from conditions that threaten objectivity or the appearance of
is an impartial, unbiased mental attitude and avoidance of conflicts
of interest, allowing internal auditors to perform engagements in such a manner that they have an
honest belief in their work product and that no significant quality compromises are made.