There has been a discussion in the cma_india yahoogroups the role of internal audit function in a company. One view was that the role of Internal Audit department has been reduced to vouching and checking the records and other view is that Internal function is Management Assurance Group.
According to Wikipedia
Internal auditing activity is primarily directed at improving internal control. Under the COSO Framework, internal control is broadly defined as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following internal control categories:
- Effectiveness and efficiency of operations.
- Reliability of financial reporting.
- Compliance with laws and regulations.
Management is responsible for internal control. Managers establish policies and processes to help the organization achieve specific objectives in each of these categories. Internal auditors perform audits to evaluate whether the policies and processes are designed and operating effectively and provide recommendations for improvement.
Internal auditing professional standards require the function to monitor and evaluate the effectiveness of the organization's Risk management processes. Risk management relates to how an organization sets objectives, then identifies, analyzes, and responds to those risks that could potentially impact its ability to realize its objectives.
Source: Submit Archieve
I started my career in Internal Audit Department 15 years ago and was in the department for 5 years. We generated lot of internal audit report highlighting the areas of non-compliance or breach of internal control, revenue leakages, improvement areas and so on and so forth. The internal audit report were repetitive in the contents and management did not take the reports seriously.
The statutory auditors reported their reservations in the annual audit report that Internal Audit Department was inadequate as compared to size of the company.
Now I realize that the solution was not with internal audit department but with the management of the company who had to make investment in a good IT strategy. And a commitment to make process improvement that would help the business to be competitive with profit maximization or wealth generation for its stake holders.
The questions is
Should I make my career in Internal Audit ?
I would consider two or three years would be a good time to work in internal audit. You should always explore opportunities to audits different business units or line of business. Volunteer yourself for new work. This should help you to gain understanding of the business. I do not feel that people who have worked for 10 years in internal audit are good decision makers as far as business is concerned .... the reason is they have never involved in decision making process.
You should plan your career to work in to span in financial accounting, management accounting and other areas of business. I have seen that the companies are more interested in Management Accounting round the year than in Financial Accounting. Be genuinely interested in the business of the company, talk with people on the front-line / shop floor and at the top. This will help you sharpen you business skills and address the accounting and business issues. Who knows you will start your own business !!!
The scope of internal audit is limited to internal controls and system set by your company. If you like challenges, get out of it. You will be able to play an active role in business and improving it.
Share your thoughts by adding comments to this, I am more than happy to read and discuss.
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