An internal audit is conducted by internal auditors employed by an organization to evaluate its internal controls, risk management, governance processes, and ensure compliance with laws and regulations. The internal audit function is independent and provides assurance and consulting services to add value and improve operations, financial reporting, and asset protection. Internal auditors plan, control, and document their work to obtain sufficient evidence and communicate findings and recommendations to management.

2.  An examination of a company's accounting
records and books conducted by an outside
professional in order to determine whether the
company is maintaining records according to
generally accepted accounting principles.

3. Skill & Competence
Confidentiality
Independence
Objectivity
Responsibility

4.  Skill & Competence
The basic principle of audit is that a competent and
skilled person should conduct it. only a qualified for an
auditor is that person can act as an auditor. The basic
qualification for an auditor is that the person should be a
chartered accountant. This is required to achieve high
standards and expertness in the work of an auditor.
Confidentiality
During the work of audit, auditor comes across many
important and sensitive information regarding his clients
work and systems. It is required that he should not part with
such information. He should maintain strict confidentiality
with regard to such information.
 Integrity

5.  Auditor should be honest and sincere in his work. He
occupies the position of faith with the clients. It is
required that he should do justice to his work and
profession.
 Independence
Auditor will be in a position to do his job successfully if he
works independently
 Objectivity
Auditor will be in a fair and honest and should work with
objectivity. He should not allow personal bias to shadow his
work.
 Responsibility
Auditor should work with responsibility. He should exercise
due care and diligence

6.  Financial Audit
 Internal Audit
 Cost Audit
 Management Audit

8. A financial audit, or more accurately, an
audit of financial statements, is the
verification of the financial statements of a
legal entity, with a view to express an audit
opinion. The audit opinion is intended to
provide reasonable assurance that the
financial statements are presented fairly, in
all material respects, and/or give a true and
fair view in accordance with the financial
reporting framework.

9.  The purpose of an audit is to enhance the
degree of confidence of intended users
in the financial statements.
 Financial audits are typically performed
by
firms of practicing accountants who are
experts in financial reporting.
The financial audit is one of many
assurance functions provided by
accounting firms.

10.  Many organizations separately employ or hire
internal auditors, who do not attest to
financial reports but focus mainly on the
internal controls of the organization.
 External auditors may choose to place limited
reliance on the work of internal auditors.

11.  Rights to have access to the Books of
Accounts –
An auditor has the right of access to the
books of accounts, all vouchers, and all
documents at all times and kept
anywhere. He can check the books of
accounts and related vouchers any time
during working hours even without giving
prior information to the directors or to any
officer of the company.

12.  Right to get information and Explanations-
Auditor has the right to get any information
and necessary explanations from directors,
employees and officers of the company, which he
thinks necessary for the discharge of his duty as an
auditor. If any information is not supplied to him, he
can write it in his report.
 Right to inform to the Members –
If during the course of his audit he comes to
notice that certain deficiencies are present in the
books of accounts he can suggest remedies to
remove them. However if his suggestions are not
followed, he has a right to inform about it to the
members.

13.  Right to visit Branches-
The branch accounts are to be audited
as per the requirements of the Companies Act,
1956. Either it should be audited by the
company’s auditor or by another qualified
auditor. If the Branch Accounts are not audited
by other auditor then the Company Auditor has
the right of access to all the books of account
vouchers and documents of the branches at all
times and he also has the right to visit the branch.
However, in case of a banking company he can
visit only branches in the country and he cannot
compel for visiting the foreign branches. He can
call the audited accounts of the foreign branches
and would incorporate those accounts in his
audited accounts.

14.  Right to receive notice and other
documents regarding General Meeting and
attend them – Auditor of the company has
a right to receive the notice of the General
Meeting. He also has a right to receive any
communication regarding the general
meeting. He also has a right to attend the
general meeting. He can also speak on the
matters concerning his job ie. accounts of
the company.

15.  Right to be indemnified –
Auditor has the right to be indemnified out of the assets of
the company for any liability, which he may incurs on himself in
defending any civil or criminal proceedings if he is proved
honest and judgment is in his favour.
 Right to have Advice –
Auditor has the right to receive technical and legal
advice necessary to discharge his duty.
 Right to sign the Report –
Auditor has the right to sign the audit report of the
Company. He also has the right of submitting the audit report.
 Right to receive the Remuneration –
The auditor has the right to receive remuneration
that was fixed for his work. He can exercise his right when the
work is complete.
 Right of lien –
Auditor has the right of lien also to recover his
remuneration.

17.  Professionals called internal auditors are
employed by organizations to perform the
internal auditing activity.
Internal auditing is
an independent,
objective assurance and
consulting activity
designed to
add value and improve an organization's
operations.

18. 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.

19.  Internal auditing is a
catalyst for
1. improving an
organization's
effectiveness 2.
efficiency by providing
insight and
3. recommendations
based on analyses and
assessments of data and
business processes.

20.  efficiency of operations
 the reliability of financial reporting
 deterring and investigating fraud,
safeguarding assets,
 compliance with laws and regulations.

21. (a) independence
The internal auditor should have the independence in terms of
organisational status and personal objectivity which permits the
proper performance of his duties
(b) staffing and training
The internal audit unit should be appropriately staffed in terms of
numbers, grades, qualifications and experience, having regard
to its responsibilities and objectives. The internal auditor should
be properly trained to fulfil all his responsibilities

22. (c) relationships
The internal auditor should seek to foster constructive
working relationship and mutual understanding with
management, with external auditors, with any other review
agencies and, where one exist, the audit committee
(d) due care
The internal auditor should exercise due care in fulfilling his
responsibilities
(e) planning, controlling and recording
The internal auditor should adequately plan, control and
record his work
(f) evaluation of the internal control system
The internal auditor should identify and evaluate the
organisation's internal control system as a basis for
reporting upon its adequacy and effectiveness

23. (g) evidence
The internal auditor should obtain sufficient, relevant
and reliable evidence on which to base reasonable
conclusions and recommendations (paragraphs 63
to 69).
(h) reporting and follow-up
The internal auditor should ensure that findings,
conclusions and recommendations arising from each
internal audit assignment are communicated
promptly to the appropriate level of management
and he should actively seek a response. He should
ensure that arrangements are made to follow up
audit recommendations to monitor what action has
been taken on them

24. (a) The internal auditor, notwithstanding his
employment by the organisation, should be free
from any conflict of interest arising either from
professional or personal relationships or from
pecuniary or other interests in an organisation or
activity which is subject to audit.
(b) The internal auditor should be free from undue
influences which either restrict or modify the scope
or conduct of his work or over-rule or significantly
affect judgement as to the content of the internal
audit report.

25. c) The internal auditor should not allow his objectivity
to be impaired when auditing an activity for which
he has had authority or responsibility.
(d) An internal auditor should be consulted about
significant proposed changes in the internal control
system and the implementation of new systems
and make recommendations on the standards of
control to be applied. This need not prejudice the
auditor's objectivity in reviewing those systems
subsequently.
(e) An internal auditor should not normally undertake
non-audit duties but where he does so,
exceptionally, he should ensure that management
understands that he is not then functioning as an
internal auditor.