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An Internal Auditing process is an ongoing appraisal of the financial health of a company's operations by its own employees. During an internal audit, internal auditors will evaluate and monitor a company's risk management, reporting, and control practices and make suggestions for improvement. Internal auditing covers not only an organization's finance function, but all the operations and systems in a firm. While internal auditors are typically accountants, this activity can also be carried out by other professionals who are well-versed with a company's functions and the relevant regulatory requirements.
”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 the effectiveness of risk management, control, and governance processes”.
(Extracted from the Professional Practices Framework published by the Institute of Internal Auditors)
This definition provides the basis for a Professional Practices Framework (PPF), which was also approved by the Board. The PPF will provide a set of building blocks that will enable the IIA and the internal auditing profession to move forward and will help to ensure that the IIA's forthcoming professional guidance reflects contemporary internal auditing practices.
The concept of "assurance services" recognises that there are many ways for internal auditing to provide services to the organisation. The term "consulting" recognises that today’s internal auditors have been able to respond to organisational challenges to add value through consulting or advisory activities without impairing the value of traditional audit services. Moreover the focus on the corporate governance states how it has added significance in many areas of the world and that controls exist to help manage risk.
This definition gives internal auditing the visibility to be a critical resource to the audit committee and senior management.
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