Internal Audit In An Organization

Running head: INTERNAL AUDIT IN AN ORGANIZATION 1

Internal Audit in an Organization

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INTERNAL AUDIT IN AN ORGANIZATION 2

Abstract

The recital of the Internal Audit Committee must work in an organization in an approach that is

in agreement with the appropriate professional values such as the Quality of the Internal Control

Systems and the Professional Practice of the Internal Auditing. An Internal Auditing has been

looked by many organizations as a key approach for the success of the organizations. Therefore,

many organizations have adopted the approach to achieve various objectives of their firms. The

proposal paper examines various questions related with Internal Auditing. The questions will

help in understanding the meaning of the key topic, reasons for the adoption and not adopting an

Internal Auditing, and other aspects such as how to realize the performance of an Internal Audit

and how to measure its performance.

Keywords: Internal Audit, Internal Auditing, organization, firm, management, financial

documents

INTERNAL AUDIT IN AN ORGANIZATION 3

Introduction

An Internal Auditing is a sovereign, consulting, assurance, and objective action designed by an

organization with the purpose of improving and adding value to the organization. Internal

Auditing has played the essential role in the management of various organizations across the

world. It has assisted in the development of the various levels of operations in the organizations.

Organizations cannot realize their roles without the presence of the internal or external auditors.

Therefore, an organization has to employ internal or external auditor for an efficient running of

an organization. It is the responsibility of the internal auditor to work within the framework of

competence in assisting the organization in accomplishing the key objectives that were

established for the success of the organization. The internal audit is an essential system that plays

an essential role in the internal auditing processes that might be considered essential for the

realization of profits within an organization (Fadzil, 2003).

An organization must have an internal audit committee. The committee is vital because a

committee of the internal auditors plays a vital role in assisting in the monitoring and

management processes in a firm. The monitoring and management of a firm are achieved since it

is the role of the auditors to provide information regarding the performance of an organization.

The committee has to advise the organization on the best strategies that can help in meeting the

goals set by the company. Therefore, the proposal paper set out to discuss various questions

related to internal auditing.

Problem statement

Internal auditing is an essential aspect for the success of an organization. However, failure to

observe the essentiality of the Internal Auditing that can lead to the poor performance of an

INTERNAL AUDIT IN AN ORGANIZATION 4

organization. It is rare for the goals of an organization to be achieved without the involvement of

either internal or external auditors. Many organizations have failed because they have never

realized the importance of internal or external auditing. Discussing the topic will help various

organizations in understanding the essentiality of the Internal Auditing.

Research questions

Various research questions are captured in the paper. The questions will play a key role in

understanding the concept of internal auditing in an organization. The questions include:

i. What is internal auditing?

ii. When did the Internal Auditing established and utilized?

iii. What are the advantages of internal auditing?

iv. What are the disadvantages of internal auditing?

v. How can the performance of internal auditors be measured?

vi. What can an organization do to realize the performance of the internal auditors?

vii. Should organizations adopt an Internal Auditing in their management?

INTERNAL AUDIT IN AN ORGANIZATION 5

Literature review

According to Brinks (1941), Internal Auditing was established in the years between the 1900s

and 1950. Brinks (1941) asserted that the Internal Audit never put to work not until the late

forties is when the aspect was widely used by various organizations across the world.Besides, it

was during the stipulated time when internal auditors started to be concerned with various

economic, business, and statistics aspects such as financial audits and management audit.

Nicolescu&Zecheru (2003) and Rose (1932) also played an essential role in representing their

attempts to establish an interview based on the management audit. According to the authors,

management audit was organized based on the various functions of management in an

organization. Management auditing was the first aspect that was considered by various

organizations because various organizations had to understand key strategies that can be adopted

for the management of the organizations.

According to Nauman (1981), financial auditing is essential in that the aspect helps in

maintaining the reliability and accuracy of various financial documents such as ledger books and

balance sheets. Therefore, Neuman (1981) asserted that organizations are required to adopt

internal auditing since the aspect plays an essential role in the accountability relationship.

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Research methodologies and techniques

Various methodologies and techniques will be used in getting the information based on the

research questions.Both qualitative and quantitative research methodologies and data analysis

will be incorporated in the paper. The methodologies and techniques that will be used in getting

the required data during the final report writing have been stated. The following are the strategies

that will be used in the analysis of the findings:

i. Surveys

ii. Project records

iii. Questionnaire

iv. Observations

v. Interviewing

vi. Sampling

The research process, data collection, and analysis methods

The above-listed methodologies and techniques will play an essential role in the provision of

findings that will be put in the final report project. The methodologies and techniques will be

based on the research questions that were derived from the research topic.

Quantitative data will be obtained through questionnaires and surveys that would be carefully

established to provide me with numerical information that can be used to produce the outcome

that can be generalized in understanding the essentiality of an Internal Auditing in an

organization. Questionnaires will be drafted and target the management team of an organization

and auditing organizations. Some of the questions that will be captured in the questionnaire

include:

INTERNAL AUDIT IN AN ORGANIZATION 7

i. Does your organization use internal auditing?

ii. Do you trust the information provided by the internal auditors?

iii. How many internal auditors can you prefer in small and large organizations?

iv. Will you continue to use the internal auditors in your organization?

v. What recommendations can you make for the organizations that do not appreciate the

work of the internal auditors?

Besides, direct observation will play an essential role in understanding the essentiality of the

internal auditors. For example, an organization can be observed from the time it has employed

internal auditors and compare the level of performance with the period when the organization

had not employed internal auditors. Interviewing will target the management team within the

organization. The management team will be interviewed to view out the essentiality of having

the internal auditors in their organization. Sampling is a technique that will also be employed

basing on the key population that will be used. For example, in our case, the key population will

be the management team and the potential customers in the organization. The sampling

technique will be achieved by suggesting the number of the target population. For example, the

technique will identify the number of the internal auditors employed in an organization.

Expected research outcomes

Various results will be expected for this project based on the research questions derived from the

research topic. We will expect the main report paper to tell us various feedbacks that will be

involved in this research paper. I am expecting the final paper to explain all the research

questions established in the paper. The research paper will need to tell us that an Internal Audit is

an important part of the organization since it determines the improvement or collapse of the

organization. It is, therefore, important for the organizations to observe the need of internal

INTERNAL AUDIT IN AN ORGANIZATION 8

auditing since it is essential for the firms to carry out the risk assessment, documentation and

process walkthroughs, control assessment, testing, and reporting. Risk assessment is essential in

prioritizing and identifying areas or procedures that need audit focus and attention.

Documentation and process walkthroughs help in gaining an understanding the procedures as

they exist in the organization. Controlling assessment plays a key role in identifying gaps and

looking for ways of designing and rectifying the gaps. Testing is also important in verifying if

the controls are working.

Reporting will provide recommendations and observations to improve the procedures and

controls within the organization. Governance as also been depicted as an essential aspect that is

played by the internal audit, thus adding value to the organization. According to the Institute of

the Internal Auditors (2012, p. 14), governance of is an essential aspect of an organization, and it

is the task of the in-house audit to govern the organization. Governance of the organization by

the internal audit is achieved through the assessment of the activities carried out in the firm and

making appropriate recommendations that can help in improving or developing the process of

governance in the company. Governance is important in an organization since the aspect of

governance promotes appropriate values and ethics in the organization.

Understanding all these will help us understand whether or not Internal Audit does indeed add

value to an organization, and the discussion depicted in the paper tell us that there is a need for

internal audit in our organizations. For this reason, organizations are required to accept that

internal audit indeed add value to the organizations. The research indicates that few

organizations prefer external auditing compared to internal auditing, but the fact will remain that

internal auditing is essential for the quick growth of the organization.

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Organizations are, therefore, required to understand that an Internal Auditing is a self-governing,

consultant, and intentioned assurance task designed to improve and add value to the operation of

the organization. Internal Auditing is an essential aspect of organizational assessment that

support a firm is bringing about its goals by bringing disciplined and methodical strategy in

evaluating and improving the effectiveness of control, governance, and risk management

(Premier & Cabinet: Division of Local Government 2010, p. 8). In simple terms, Internal

Auditing can be understood as the essential aspect of organizational assessment that is

responsible for monitoring the efficiency of the internal control procedures that have been

in-house controls in various.

Based on the discussion that will be depicted in the paper, the research will show that internal

auditing is important for the organizations, and it adds values for operation of the firm, thus

leading to its improvement. The positive side of internal audit outweighs the negative side of

internal audit, thus giving us a conclusion that internal audit should be accepted by the

organizations.

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References

Brinks, V. Z. (1941). Internal Auditing. New York: Ronald Press.

Fadzil, F. H. (2003). Internal Auditing Practices and Performance of the Internal Audit

Department. University Sains Malaysia.

Institute of Internal Auditors (2012). The Standards for the Professional Practice of Internal

Auditing (Standards). https://na.theiia.org/standards-

guidance/Public%20Documents/IPPF%202013%20English.pdf

Premier & Cabinet: Division of Local Government (2010). Internal Audit Guidelines.

https://www.olg.nsw.gov.au/sites/default/files/Internal-Audit-Guidelines-September-

2010.pdf

Rose, T. G. (1932). The Management Audit. London: Gee & Co.

Neuman, D. 1981, "Defense Contract Audits - The CPA's Role", Journal of Accountancy,

vol. 151, No. 4, p. 42-48.

Nicolescu, O. &Zecheru, V. (2003). Audit Management in the Public Institutions, Economic

Tribune Institutions. Publisher House, Bucharest.

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