Internal audit quality: developing a quality assurance and Improvement Program
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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. Show —Institute of Internal Auditors, Definition of Internal Auditing (2013) Internal auditing is an internationally recognized profession guided by a common commitment to enhancing governance, risk management, and control processes. Although the nature of internal auditing may vary between countries, jurisdictions, and organizations, central to its purpose is a desire to support management to improve operational, and ultimately organizational, outcomes. There is no single correct approach to internal auditing. Internal auditing should look and feel different for each organization. The best internal audit functions will reflect the priorities and values of each organization. Senior managers and audit committees across organizations will each have their own expectations of the internal audit function. The challenge for chief audit executives is to understand and, wherever possible, reflect these expectations in their operations. HistoryInternal auditing can be traced back to the Persian Empire. Murray (1976) attributes the start of internal auditing to Darius the Great, “who ruled his people from 521 to 425 B.C.” Darius exercised his rule at different times of the year from four scattered capitals in different parts of the country—Persepolis, Ecbatana, Susa, and Ctesiphon. His empire was divided into 20 provinces, each administered by a satrap who paid taxes to the empire according to the wealth of the province. In order that the honesty of the rule of the satrap could be established, Darius sent representatives out to all parts of his empire. They became known as “the eyes and ears of the king”—possibly the first internal auditors. Despite the early beginnings of internal auditing, the profession did not experience considerable growth until the nineteenth century, when the Industrial Revolution resulted in the large-scale systemization of processes, and an enhanced focus on quality and consistency of outputs. Its growth continued into the twentieth century with the development of management theory and practice and the emergence of the “manager” as a distinct role in corporate operations. The Institute of Internal AuditorsThe first major book on internal auditing was authored by Victor Brink in 1941. Around the same time, a small group of professionals were looking to establish a professional association for internal auditors. The Institute of Internal Auditors (IIA) was established in the United States in 1941 with 24 members. The IIA developed a Statement of Responsibilities of Internal Auditing in 1947. According to Flesher (1996), the statement intended “that internal auditing dealt primarily with accounting and financial matters, but may also properly deal with matters of an operating nature. In other words, the emphasis was on accounting and financial matters, but other activities were also fair game for the internal auditor.” The role of the internal auditor was to evolve quickly, however, and as early as 1948, Byrne recognized the potential for internal audit to add value to organizations. He stated, “Management has broadened the internal auditor's horizons and it is the auditor's responsibility to take advantage of the opportunities presented in order to realize the true value to be obtained from a dynamic internal audit program” (Byrne 1948). Flesher (1996) found the emphasis on accounting and finance matters in the IIA's 1947 statement had significantly changed by the release of a revised statement in 1957, which allowed the internal auditor to provide services to management, including:
In 1978, the IIA released the Standards for the Professional Practice of Internal Auditing. The IIA established its first international chapters in 1948, and by 2012, membership had grown to over 180,000 across 190 countries. According to its website, the mission of the IIA is to provide dynamic leadership for the global profession of internal auditing. The IIA has identified activities that support this mission:
The IIA is governed by a board of directors elected at an annual meeting of the membership. Under the board of directors sit a number of committees comprised primarily of volunteer members. Operationally, the IIA is supported through an office in the United States, which has a dual r... What does a quality assurance and improvement program include?A Quality Assurance and Improvement Program (QAIP) enables an evaluation of the internal audit activity's conformance with the Definition of Internal Auditing and the International Standards for the Professional Practice of Internal Auditing (Standards) and an evaluation of whether internal auditors apply the Code of ...
What is quality assurance internal audit?The quality assurance review determines whether an organization's internal audit program meets the expectations of the IIA's International Standards for the Professional Practice of Internal Audit.
How does an internal audit department contribute to the improvement and growth of the organization?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.
How can internal auditors improve performance?One of the simplest ways for internal auditors to create value is to ensure that their objectives and plans are always aligned to business objectives. Not only does that help them deliver more relevant insights, but it also helps the business be clear about what they want to achieve.
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