EXPOSURE DRAFT – PROPOSED REVISED DEFINITION OF INTERNAL AUDIT
(Last date for comments -November 25, 2017)
The Internal Audit Standards Board of The Institute of Chartered Accountants of India (ICAI) invites comments on proposed revised definition of internal audit. An explanation has also been included as part of the revised definition to provide additional clarity on the key words used.
Comments are most helpful if they indicate a clear rationale and, where applicable, provide a suggestion for alternative wording. Comments can be e-mailed at firstname.lastname@example.org; email@example.com last date for sending comments is November 25, 2017.
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.”
Independence: Internal audit should be an independent function,achieved through the position, organization structure and reporting of the internal auditor.
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.
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.
Organizational objectives incorporate the interests of all stakeholders and includes compliance with internal policies and procedures and laws and regulations.
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.