What is an Internal Audit?
“Internal Audit is a multidimensional discipline that spans over all sectors that has evolved to a key position within organisations.”
By analysing this quote from The Institute of Internal Auditors South Africa we can gather quite a few key discussion points to explain just exactly what Internal auditing entails.
From the phrase “multidimensional discipline” we can gather that, unlike External Audit (EAs), Internal Auditing (henceforth IAs) is not a purely financial discipline. Internal audits entail a broader scope of work including an understanding or analysis of the organisation’s strategy and operations. IAs have a wholesome focus on the organisation including different departments, functions and operations.
What is the difference between an IA and an EA?
Firstly, there is a different decree. Where EAs have an obligation to shareholders and the public with regards to annual reports and statements, IAs have an obligation to senior management and the board. IAs work via the audit committee and address key areas including: the state of governance, risk, and control within the organisation.
IAs and EAs also have different areas of focus. As mentioned above, IAs focus on the whole organisation whereas EAs focus on finance and accounting. The former are part of the organisation, but act independently from management, the latter are independent and external parties with a statutory obligation.
Further, they differ in the area of risk and control. Both identify risks and assess controls, but IAs review the appropriacy of control and ensure that risks are effectively managed across the board. EAs, on the other hand, identify and assess risks and controls in the financial sphere. They place emphasis on authenticating financial statements.
At the end of the day it is the purpose of IAs to consult changes to improve the operational performance as a whole, whereas EAs make recommendations to improve financial control.
What do Internal Auditors at Enslins do?
At Enslins we have qualified auditors who work in accordance with the Code of Ethics and International Standards to ensure unbiased and objective views independent of the operations we evaluate.
Our auditors report to the highest level of management. This usually includes senior managers, governors, board members, accounting officers or auditing committee members.
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