Nakenov B.

Kazakh Economic University named after T.Ryskulov, Kazakhstan

Internal Auditing in Present Days

It is very important for each organization to have its activity improved constantly and its set goals achieved in consecutive and effective manner.

The role of internal auditing is incontestable in achieving the goals formulated by the organization; and independent and objective opinion related to functioning of internal auditing is the important requisite for further development of the organization’s activity as a whole.

Independence of the internal auditor is the key requirement for internal auditing to be fulfilled effectively. Being independent the internal auditor is able to objectively evaluate the effectiveness of risk management, internal control, and corporate governance processes. At the same time the internal auditor should be guided by internal audit standards and principles and follow the ethical norms.

Internal auditing has undergone major changes in the past few decades and has come to include areas of expertise used outside of financial and accounting matters. This growth of the role and expectations of internal auditors led to the development of internal auditing as a profession.

Nowadays the role of internal auditing in risk management and internal control processes can be stated as vitally important since the successful accomplishment and improvement of the aforementioned processes directly affects the organization’s operation effectiveness.

The Institute of Internal Auditors (IIA) defines internal auditing as follows:

«An independent, objective assurance and consulting activity designed to add improve on organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes».

Assurance services involve the internal auditor’s objective assessment of evidence to provide an independent opinion or conclusions regarding a process, system or other subject matter. The internal auditor determines the nature and scope of the assurance engagement.

Consulting services are advisory in nature, and are generally performed at the specific request of an engagement client. The nature and scope of the consulting engagement are subject to agreement with the engagement client. When performing consulting services the internal auditor should maintain objectivity and not assume management responsibility.

The necessity of improving the organization’s operation increases the role of internal auditing in the company. This task’s accomplishment requires the audit operations’ organization to be improved further along with the internal auditing methodology. It should be noticed that all business processes occurring within the company have to be the area of attention when performing contemporary internal auditing. In this respect it is also worth mentioning that contemporary internal auditing should focus on all the business processes taking place within the organization. Furthermore, the results of internal auditing should not confine within stating the facts of violation and amounts of the defined losses; conversely, the results should be aimed at sharpening the preventive and precautionary measures as well as setting up conditions for non-admission of such violations. Thus we would increase the effectiveness (utility level) of internal auditing for the company governance system.

Increase of the internal auditing effectiveness directly depends on proper organization of its operation. Total control over the company’s financial-economic activity which is usually so desirable to be achieved by the head of the organization is impossible. In order to accomplish its contemporary goals and effectively plan its operations internal auditing should build up its operation based on the data provided by the risk management system, which is the system of managing the risks by means of identifying, evaluating the risks and taking measures for diminishing the negative effects.

References:

1. International Standards for the Professional Practice of Internal Auditing / Institute of Internal Audit (IIA);

2. Regarding the last changes in auditing standards / “Audit”, No 3, 2009;

3. Vassyliyeva N.E. “Internal auditing. Some ways of its development” / “Internal control in credit organizations”, No 1, 2009;

4. Suglobov A.E. “Evaluation of the internal control system” / “Audit bulletin”, No 9, 2009.