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Ways Or How To Gauge/Assess The Effectiveness/Reliability Of An Internal Audit Department

September 24th, 2008 / No comments yet

Append below some of the ways to gauge the effectiveness or reliability of an Internal Audit Department:

Status In Organization Structure/Chart & Access/Communication To Top Level Management 

  • The level of department and the level of management to which the internal auditor reports to.
  • Generally, the higher the level the internal auditor reports means the greater will be his independence
  • Question to ask is whether the internal auditor is given access and can communicate to the Board of Directors/Audit Committee

 
Scope Of Function 

  • The nature and depth of coverage of the assignment which the internal auditor
  • More importantly, look whether there is any sort of restrictions, if any on the scope of work/activities of the internal audit department.
  • Are there some departments that the internal audit department cannot audit or has very weak scope in audit terms/reference?
  • Are the internal audit objectives in congruence with the objectives of the company and are they measurable, achievable and able to communicated

 
Technical ,Experience & Knowledge Competence 

  • Is the internal auditor having adequate proficiency in terms of experience, knowledge or technical competency?
  • Need to review his or her experience and professional qualification who are working in the internal audit department
Due Professional Care 

  • Ascertain whether the internal auditor work appear to be properly planned, supervised, reviewed and documented.
  • Check/review whether there are any adequate audit manuals, audit programmes and working papers existing in the internal audit department
Follow Up Of Internal Audit Recommendations 

  • Ascertain whether the internal audit recommendations are implemented by the management, whether errors reported are corrected without delay or any remedial action taken either immediately or timeline
  • Note that if other departmental/ operating/ line managers do not bother much of the internal audit recommendations, it would mean that it is not effective and do not have the support of top management level!

 
 
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