Internal audit - is a providing, objective and advisory activity that helps the economic entity to achieve its goals related to the development of its activity and improvement of its efficiency. This activity is carried out with a systematic approach to the development and evaluation of the effectiveness of control and management, risk management. The internal auditor is an employee of this service who performs the audit. Internal control system and internal audit service activities are regulated by internal audit standards. This regulatory document is approved by the Internal Audit Standards Board of the Institute of Internal Auditors.
What are the duties of the internal audit service?
The internal audit service is independent in conducting internal audit, preparing audit-related reports and planning its work, except for cases defined by legislation. The internal audit service has the following tasks:
- to determine the adequacy and efficiency of the internal control system created to ensure efficient and regular activity in the economic entity, manage risks to achieve goals, and respond to changes in a short period of time;
- check the accuracy and reliability of financial statements and accounting;
- to assess the efficiency of the economic entity's expenses;
- verify compliance of the activities of the business entity, as well as the structural divisions of the organizations and enterprises subordinate to it, with the approved action plan and normative legal acts;
- to evaluate the correctness, efficiency, control of the use of resources and the adequacy of protection against damage.
Who can be an internal auditor?
Persons with a higher economic or legal education or higher education in another specialty and 4 (four) years of work experience in audit or related fields can be internal auditors. This requirement for the position of the head of the internal audit service is 5 (five) years.
Persons who have been deprived of the right to hold a position or engage in certain activities in the financial and economic sphere by a legally binding judgment of the court, or who have not served the sentence related to this punishment, cannot hold the position of internal auditor and head of the internal audit service. Also, if the internal auditor has a family relationship with the founder, shareholder, member of the management body or the person responsible for the preparation of financial statements of the economic entity, it is prohibited by law to conduct an audit of that economic entity.
Duties of the internal auditor
The internal auditor performs the internal audit according to the work plan. The work plan is approved by the Audit Committee or the relevant management body of the economic entity. The activities of the internal auditor while performing his duties to legislation is responsible for compliance. Also, he must refuse to perform tasks that are not within his authority by giving written information to the management body of the internal audit service or business entity.
The internal auditor must adhere to the principle of confidentiality and must not misuse information containing commercial secrets obtained in the course of his activity.
Duties of the head of the internal audit service
Head of internal audit service:
- prepares annual and long-term development plans related to the activities of internal auditors and submits them to the relevant management body of the economic entity;
- submits the internal audit report to the relevant management body;
- makes proposals to the relevant management body, indicating the persons responsible for eliminating the defects and deficiencies discovered during the audit;
- objectivity or independence of the internal auditor or informs the relevant management body about interventions;
- applies to the relevant management body in order to ensure the implementation of the organizational and technical measures necessary for the organization of the work of the internal audit service;
- determines its procedures in accordance with the methodology of internal audit;
- evaluates the quality of work of internal auditors;
- if necessary, with the consent of the relevant management body, involves other employees in conducting the audit;
- submits the annual report on the activity of the internal audit service to the relevant management body.
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