Perhaps one of the most important aspects of an internal auditor`s job is the ability to conduct an objective assessment of a company`s activities. If company policy prevents internal audit from doing its job as intended, the company will not reap the benefits associated with honest internal audit, such as increased efficiency and productivity, less waste, financial savings, and regulatory compliance. The Sarbanes-Oxley Act of 2002 was passed to improve reporting and oversight standards for publicly traded companies in the wake of high-profile accounting scandals involving Enron and WorldCom. To implement the new integrated auditing standards, the SEC created the Public Company Accounting Oversight Board (PCOAB) to supervise, inspect, and discipline companies required to comply with legal requirements. Highlights of the Act include: A degree in one of the following fields should be included as a qualification requirement for internal auditing: The Institute of Internal Auditors (IIA) is the principal independent regulator of the internal audit profession. While internal auditors are not required to join the IIA, membership in this internationally recognized professional association provides opportunities for professional development and credential certification. All IIA members are bound by the Institute`s Code of Ethics and Professional Standards. If candidates meet the eligibility criteria, they must pass a written exam before receiving their certification. Internal audit consists of four main topics: general accounting policies, internal audit techniques, and management principles. While there are laws requiring companies to conduct ongoing audits of their operations, auditor qualification and practice standards are not regulated by state and federal licensing authorities. This means that auditors do not need to take specific courses or register with a governing body.
State and federal licensing agencies are responsible for establishing and maintaining standards of practice in regulated professions such as certified public accounting. However, in keeping with the independence of the private sector, which uses internal audit services, the standards are maintained by professional non-governmental associations. In addition to the requirements of the IIA, all internal auditors are bound by the standards contained in the procedures manuals developed and published by the individual companies for which they work. These standards may vary from company to company. Some small businesses may not have established internal standards and procedures before hiring an internal auditor. In such cases, the auditor should work closely with management and business owners to refine controls and develop internal audit procedures. Compliance audits are used to assess a company`s compliance with applicable laws, regulations, policies and procedures. Legal and policy requirements may be created by federal or state laws. An organization`s management or board of directors may also create internal compliance requirements. Although several important pieces of Congress became law after the stock market crash of 1929 – the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, and the Investment Advisers Act of 1940 – two defined the role of internal audit within a legal framework: the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002. More recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act specifically targeted practices in the financial services industry. Students interested in working in the field of internal audit choose elective courses in: An internal auditor helps establish, develop, and evaluate a company`s internal controls over financial reporting, compliance, and business operations.
An internal auditor job description should primarily emphasize the key role of conducting company-wide internal audits in accordance with annual audit objectives and holding opening and closing meetings with management, including the provision of all audit reports. We are looking for an internal auditor with excellent accounting and analytical skills. Internal auditors are expected to be organized with brilliant problem-solving skills and consistently meet tight deadlines. You must have excellent math talent, strong computer skills, and excellent communication skills. Internal auditors often have professional and educational backgrounds in accounting, finance, behavioral sciences, communications, computer systems management, economics, and law. Internal auditors are very familiar with quantitative methods, statistical samples and business processes. Your background can play an important role in understanding a particular business niche, as understanding the overall business being assessed is critical to the success of an internal audit. For this reason, people who have held various positions within the company are in a better position to identify the objectives and challenges associated with the internal audit process. The Institute of Internal Auditors (IIA) is the leading international professional association for internal auditing.
The IIA`s globally accepted definition of internal audit states that companies can promote objective audits by employing auditors who perform no other function within the organization. The Institute of Internal Auditors recommends in Section 1100 of the IIA Guidelines and Standards Manual that internal auditors report to a single committee or board member that oversees the internal audit department to maintain independence and objectivity. Auditors in other roles within the organization may have difficulty conducting objective audits because their findings may impact other groups, individuals or managers who have seniority or authority over them. Most businesses and small businesses are not required by law to conduct audits in their operations. However, many private companies choose to use auditors to improve their operational processes and procedures. The four techniques that make up the internal audit process allow auditors to gather information and evidence, analyze the data collected and, if necessary, report to the board with suggestions for improvement. Strong communication skills, both verbal and written, should also be included in an internal auditor`s job description, as there will be ongoing communication with teams in other business units and the senior management team. Simply put, the functions of an internal auditor are as follows: The Securities Exchange Act of 1934 was one of the first modern federal laws designed to regulate financial markets in the United States. The Act achieved this goal by establishing a centralized regulator, the Securities and Exchange Commission (SEC).
The Act also includes several mandatory audit requirements in Section 10A for publicly traded companies. Some of the highlights of Article 10A include: In the days following the collapse of Lehman Brothers and Bear Stearns, the financial auditors seemed to agree that the cause, at least in part, was the inability to implement or respond to appropriate internal audit practices.
