Critical Analysis Of Internal Audit

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Abstract Auditing plays a very vital role in the business life of a company as it provides transparency, competence and accountability. The auditors are to provide independent assurance to the shareholders that the prepared financial statement is correct. That why the auditors conduct an audit on the financial statement of a firm with integrity and independence so that it is free from error and fraud. The research is going to show in regards to Critical analysis of the independence of the internal audit function through its relationship with management and the audit committee and the audit committee create threats to independence. Thus, this assignment focus is on the internal auditors in the firm. THE TABLE OF CONTENT…show more content…
Auditing is done by investigating or evaluation of objective evidence, the adequacy and compliance with established procedures, or applicable documents, and the effectiveness of implementation. Thus, there are two types of auditors; internal auditor and external auditor. Furthermore, the assignment will focus more on the internal auditors functions. The critically analyse of the independence of the internal auditors and the relationship between audit function and management. And the audit committees create threats to independence. Moreover, the relationship between internal audit function and management how the management depends on auditing reports and make decisions for the organization and how the auditing committee appoints the auditors and checks on the auditors responsibility, if they work according to the regulations and companies act as required. Adding on, as the management shares a positive relationship towards the internal auditing, it also can create threats to the internal auditors. Such risks may include management not giving fair financial reports for accountability. Management employee sharing friendly relationship with auditors can team up and play with the figures and report which possibly can create a loss in the…show more content…
Examples of specific threats Types of threats Possible safeguards The holding by the auditor of a direct or indirect financial interest in the client entity Self interest • First, it is important to note that the ethics partner should be made aware of any direct or indirect financial interests of partners, staff and of connected persons. • The influential individual and his connected persons should:  Not be permitted to work on the audit engagement or non- audit service and where possible in any department servicing the client; or  They dispose of the interest; or  There is a policy permitting a minimum shareholding which is not material to either the entity or the individual. • If the partner (or person connected to him) holds such a direct or indirect interest he should either dispose of the interest or the firm should decline (or withdraw from) the engagement where disposal of the shares is an

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