internal audit

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Internal Audit

The process of reviewing business activities in-house to identify inefficiencies, reduce costs, and otherwise achieve organizational objectives. Internal audits may investigate potential theft or fraud and ensure compliance with applicable regulations and policies. They also assist in risk management. In a large company, especially a publicly traded one, internal auditing is conducted by a board independent from any management and answerable only to an audit committee, a subcommittee on the board of directors. The growth of internal audits accelerated following the 2002 passage of the Sarbanes-Oxley Act, which increased the accounting regulations for public companies.

internal audit

The examination of a company's records and reports by its employees. Internal audits are usually intended to prevent fraud and to ensure compliance with board directives and management policies. In contrast, the financial statements presented to stockholders are typically prepared by outside parties to ensure absolute objectivity. Compare external audit.

internal audit

see AUDIT.
References in periodicals archive ?
Caption: Jacob Flournoy established the internal audit department for the University of Arkansas System.
As risks increase, internal audit's coverage of risk and performance in emerging areas is critical, which provides internal audit with an ideal opportunity to demonstrate the value of the evolving profession.
Regardless of whether there are separate risk management and strategic planning groups in your company, internal audit should be involved in identifying emerging risks, not just the ones it knows today Hirth says convergence of U.
The growth of internal auditing over the years has led to much consideration for relying on internal audit work by external auditors.
Internal audit budgets, staffing, and boardroom exposure have increased (Carcello, Hermanson, and Raghunandan 2005), and the Institute of Internal Auditors (IIA) has seen an explosion of membership and interest.
Requires the Office of Internal Auditing to conduct internal audits according to an annual plan and to make reports of those audits
An effective internal audit group can do everything from evaluating the substance of transactions and testing for compliance with GAAP and accounting and financial reporting procedures, to blowing the whistle on alleged financial statement fraud.
Remember that the council would not ordinarily see any DWP internal audits,'' Galanter wrote in an e-mail message.
Most large public and private organizations have a formal internal audit function that provides independent and objective assurance, compliance, and consulting-type activities to improve the organization's operations.
The evaluation of an entity's (along with the auditors') exposure to risk from loss or injury, the structuring and planning of the internal audit function, and the recruiting and development of staff are covered as well.
Instead, it would generally exclude an auditor from performing both external and internal audits for the same client.