Academic journal article Journal of Accountancy

Internal Audit Oversight

Academic journal article Journal of Accountancy

Internal Audit Oversight

Article excerpt

One of an audit committee's most important responsibilities is to oversee the organization's internal audit function. Here are 10 steps audit committees can take to facilitate proper oversight and direction of internal audit:

[check] Evaluate the current and projected scope of internal audit coverage of risk management and governance.

Internal auditors have increased their focus on risk management and governance processes, and audit committees have stepped up their interest, too.

[check] Ensure that internal audit's risk-based plan is flexible and responsive to change. Amid complex and dynamic risks, many internal audit groups update their risk assessments and audit plans more than once a year.

[check] Determine how internal auditors are using technology. New tools such as data mining are increasingly used to enhance internal audit's efficiency and effectiveness. The audit committee also should be aware of the specialized skills and budgetary support required by internal audit to achieve its technology objectives.

[check] Assess the strategic vision and plan for internal audit. Internal auditors must plan effectively to keep their internal auditing processes current with new developments, technology, and skills.

[check] Define how internal audit will provide value to the organization. Providing assurance is a core and expected value driver for any internal audit function. Other value can come from providing high-quality talent to organizations, and providing monitoring and data-mining capabilities to improve business-unit performance.

[check] Strengthen communications and relationships between internal audit and the audit committee. Audit committees and chief audit executives (CAEs) can jointly attend training. Having a CAE's direct reports meet periodically with the audit committee chair and make presentations to the audit committee also can build relationships and aid in succession planning for the CAE. …

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