The document discusses the roles and responsibilities of internal auditors and audit committees. It notes that internal auditors review controls, compliance, operations, and risks. They ensure controls are working properly and in accordance with laws and regulations. The audit committee oversees the internal audit function and monitors financial reporting, controls, and compliance. It reviews internal and external audit reports and the company's internal control statement. The committee helps provide assurance to shareholders that risks are adequately managed and controls are functioning effectively.

1. Audit & compliance

3. Role of internal auditor Review acs & I.C.S Assist with identification of significant risks Review 3 E’s of operations- VFM audit Examine financial & operating information Special investigations , e.g suspected fraud Review compliance with laws & external regulations

4. Financial audit Operational audit Project audit VFM audit Social & environmental audit Mgmt audit I.A looks at controls - PAPAMOSS Types of audit work

5. Need for I.A I.A is a mgmt control- PAPA(M)OSS I.A review effectiveness of other controls in the org. Ensure controls are working properly I.A is also often a statutory requirement Good corporate governance may also suggest an I.A dept I.A is 100% audit – VFM audit Chief internal auditor is in charge of the dept and reports to the audit committee.

6. Need for I.A Factors affecting the need for I.A Scale & complex operations No of employees Cost benefit analysis Change in: org structure, reporting process or Mgmt.Info.Sys Change in key risks- change in PESTEL factors Problems with existing ICS Unexplained / doubtful txns

8. To reassure the BOD that ICS are working properly

10. INDEPENDENCE Risks if No Independence Failure to report control breaches Accepting info without checking No professional skepticism Blind on unethical matters Give undeserved positive feedback

11. INDEPENDENCE Threats to independence Threat to independence is when the opinion of the auditor is doubted. Threats can be either REAL or PERCEIVED ACCA code of ethics : Self interest Familiarity Advocacy Self review Intimidation

13. Deal with characteristics of the org

14. Deal with parties performing Int Audit

15. Performance stds

16. Describe nature of Int Audit activities

19. Head IA : establish risk based plans, decide on work priorities, is consistent with org’s objectives.

20. Review IA plan annually

21. Head I.A submit plans to senior mgmt & BOD for approval

23. I.A contribute to improvement of risk mgmt & ICS

24. Evaluate risk exposure relating to : governance , ops , information sys.

25. Effectiveness & efficiency of ops

26. Safeguard assets

28. Helps evaluate efficiency & effectiveness of controls

30. Makes recommendations where possible

32. Independence achieved when I.A can show that normal stds of I.A work have been followed

33. No pressure to “ cut-corners” from mgmt because of low std work.

34. IA work will be to : identify, analyseevaluate , record sufficient evidence to achieve objectives of the engagement .

35. Info should be : reliable , relevant , useful wrt objectives of the engagement

36. Auditor conclusion – based on suitable analysis & evaluation

39. S/h are owners of the Co. They are entitled to know if ICS are sufficient to protect their Inv & help maximizing value.

40. Provide s/h with sufficient assurance – BOD conduct annual review of ICS & report to s/h about effectiveness of controls.

41. Review cover all material controls eg. Financial , operational , risk mgmt.

42. Review done in line with COSO elements of effective ICS

43. Annual report- inform members of the work of IA

45. Audit committee Audit work:

46. Audit committee Composition Consist of NED’s – at least 3 At least one NED should have recent financial expertise

47. Audit committee Roles Oversight, assessment, review of other functions / systems in the company. Board delegates work to audit comm to meet objectives pertaining to ICS Review ICS, oversee work of IA, monitor integrity of FS , review work of external audit Role of audit comm was considered in combined code & SOX and Kings report contain similar recommendations.

49. Audit comm should have min 3 annual meetings to coincide with external audit assignment.

50. Audit comm should meet once a yr with only internal & external audit – without mgmt. so that the auditors can voice out concern.

51. Chairman of audit comm can informally meet mgmt to get more indepth info about important matters.

52. Disagreement between audit comm members will be referred to main BOD for resolution

53. Audit comm reviews annually its TOR & effectiveness & recommend changes to the BOD

56. Supervise major txn

57. Receive reports from internal & external auditors iro Control Mechanisms

58. Approve Audit report- Internal control stmt

59. Review Fraud Risk Mgmt – ensure awareness promoted & a proper reporting/ investigating mechanism exist. Receive reports on conclusions of tests of ctrls by I.A & Ext aud and consider their recommendations.

60. Review compliance- regulation, legislation, ethics)

61. Monitor adequacy of ICS – focus on ctrl environment , mgmt attitude, mgmt control.