State of the art Internal Audit

• European Confederation of Institutes of Internal Auditing (ECIIA)

In this chapter we intend to summarise some important aspects of a “state of the art” Internal Audit practice. This is helpful to understand the proposals we make in chapter 4. A properly organised and working Internal Audit Function can and must play an enhanced role in Corporate Governance as the survey showed that the current role of Internal Audit is still quite minor in comparison with other parties. The most important aspects centre around the organisation of the Internal Audit Function within companies as well as its relationship with other stakeholders, and Internal Audit’s scope, methods and procedures. Internal auditing is defined by the IIA as an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes (Corporate Governance). This can seamlessly be linked to the OECD Principles of Corporate Governance 2004 with the objective to provide for a general framework and can be regarded as a common denominator of Corporate Governance content.

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