Government Internal Audit Career

Differences between Internal and External Audit For many people 'audit' is about the end of year accounts; while that's very often the case, internal audit has a very different focus which may not be widely understood.

Who are the auditors? Internal auditors can be employed by the business, government or outsourced. While an accounting background is common, they can also come from other backgrounds. External auditors are an outside firm of accountants Some of the internal auditors I worked with in my career had degrees in History, Management and other non-accounting/financial majors.

What is the purpose of the audit? Internal audit considers whether business practices are helping the business manage its risks and meet its strategic objectives - it can cover operational as well as financial matters. External audit considers whether the annual accounts give a 'true and fair view' and are prepared in accordance with legal (GAAP, GAAS, etc.) requirements. The main focus of external auditing is compliance with accounting rules (GAAP, GAAS). While compliance can also be the focus of an internal audit, it typically is compliance with the organizations policies and procedures versus external ones.

Main objectives of the audit Internal auditors evaluate and improve the effectiveness of governance, risk management and control processes.  This provides members of the boards and senior management with assurance that helps them fulfill their duties to the organization and its stakeholders. External auditors add credibility and reliability to financial reports from the organization to its stakeholders by giving opinion on the report All government organizations are required to have an annual external audit to assure the public that their financial statements are presented fairly and in compliance with appropriate legal requirements. Internal auditors focus on reviewing department processes and procedures to not only ensure compliance with organizational policies but also with an eye to improving the efficiency and effectiveness of the process.

Reporting Internal auditors can issue their findings in any type of report format. External auditors must use specific formats for their audit opinions and management letters. Internal audit reports are used by management. External audit reports are used by stakeholders, such as investors, creditors, and lenders. External auditors must use a specific report format based on the type of opinion they are giving. Internal audit reports can be in any format that the organization prefers. Internal audit reports are not required to be published by and organization but are typically issued to upper management as well as the audited department.

Responsibility for Improvement Improvement is fundamental to the purpose of internal auditing. But it is done by advising, coaching and facilitating in order to not undermine the responsibility of management. External auditors focus is not on ways of improving the organization, however there is a duty to report problems.

Activities of Internal Audit

Evaluating Controls Internal audit’s role in evaluating the management of risk is wide ranging because everyone from the bottom to the top is involved in internal control. The internal auditor’s work includes assessing the tone and risk management culture of the organization at one level through to evaluating and reporting on the effectiveness of the implementation of management policies at another.

Evaluating risks It is management’s job to identify the risks facing the organization and to understand how they will impact the delivery of objectives if they are not managed effectively. Managers need to understand how much risk the organization is willing to live with and implement controls and other safeguards to ensure these limits are not exceeded. The techniques of internal auditing have therefore changed from a reactive and control based form to a more proactive and risk based approach. This enables the internal auditor to anticipate possible future concerns and opportunities providing assurance, advice and insight where it is most needed.

Analyzing Operations Achieving objectives and managing valuable organizational resources requires systems, processes and people. Internal auditors work closely with line managers to review operations then report their findings. The internal auditor must be well versed in the strategic objectives of their organization and the sector in which it operates in, so that they have a clear understanding of how the operations of any given part of the organization fit into the bigger picture.

Other Internal Audit Functions Internal audit can also include a variety of consulting services within the organization, including: cost model development user fee cost recovery analysis process and financial analysis risk assessment and mitigation analyses focus group facilitation.

Do I have what it takes to be an Internal Auditor? Internal auditors must possess a high level of technical internal auditing skills and knowledge. They must also be effective communicators, good project managers, analytically strong and good negotiators.

Just a final thought for you Just a final thought for you. If auditing for fraud always look here first!

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