The Internal Audit Standards Board of ICAI has issued Exposure Draft of Revised Definition of “Internal Audit” for Comments to be submitted latest by 25 Nov. 2017. Also, the key words used in the proposed revised definition of Internal Audit by the ICAI have been explained in the draft for the convenience of the stakeholders. The comments can be emailed at [email protected]; [email protected]
ICAI’s PROPOSED REVISED DEFINITION OF INTERNAL AUDIT
“Internal audit provides independent assurance on effectiveness of internal controls, risk management processes and contributes to enhancing governance for achieving organizational objectives.”
Explanations to above Proposed Revised Definition
i) Independence: Internal audit should be an independent function,achieved through the position, organization structure and reporting of the internal auditor.
ii) Internal controls and risk management: are an integral part of management function and business operations.An internal auditor is expected to evaluate the design and operating effectiveness of internal controls and risk management processes (including reporting processes) as designed and implemented by the management.
iii) Governance: is a set of relationships between the company and its various stakeholders and provides the structure through which the company’s objectives are set, and the constant performance monitoring required to help attain them.
iv) Organizational objectives incorporate the interests of all stakeholders and includes compliance with internal policies and procedures and laws and regulations.
v) Advisory role: At certain times, in addition to providing assurance, the internal auditor may adopt an advisory role to help an organization achieve its objectives, provided this does not compromise the independence of the internal auditor.