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 ?
The chairman of the committee, Haji Habib ur Rehman informed the members that those Internal Audit Staff who are performing their duties since May, 2003, their services may be regularized to enhance their performance.
Recurring meetings between the company controller, internal audit staff, and external audit team should foster understanding of the external audit attestation process.
Early implementers (accelerated filers) experienced not only astronomical costs, but heavy burdens on their finance and internal audit staffs.
Partly in response to the demands of Sarbanes-Oxley, and partly to bolster overall IT skill sets, beginning in 2004 Baxter increased its internal audit staff from I8 to more than 30.
We recruited senior internal audit staff who worked alongside PWC to fill the skills gap.
He says that external auditors also will be able to use the work of internal audit staff.
Typically, the firm would have relied upon its internal audit staff to conduct a review of the subcontracting function in order to determine its strengths and weaknesses.
As my own case has shown, internal audit staff can be placed under tremendous pressure not to disclose their findings.
A QI could request the IRS to waive an audit by an external auditor if (1) the QI maintains a substantial and independent internal audit staff and (2) its internal auditors have determined that the QI is in compliance with its agreement for each of three preceding years.
Regarding the functioning of internal auditing in their organizations, personnel working in the area of information systems expressed a desire to see internal auditing function more in accordance with the following concepts: (1) the internal audit staff should possess business skills in a variety of areas beyond accounting and finance, (2) the primary objective of an internal audit is the assessment of the adequacy of internal controls and the validity of financial results, not operation effectiveness or efficiency, and (3) when internal auditors and operating management disagree about the significance of audit findings, audit reports should present both perspectives.
We find financial analysts' perceptions of external auditor independence are greater when the client employs its own internal audit staff or outsources to a different CPA firm, compared to the situation in which the external auditor performs all internal audit duties.

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