This document discusses internal auditing, internal audit committees, and the roles and responsibilities of boards and internal auditors in corporate governance for cooperatives. It defines internal auditing and explains that internal audit committees must have 3-5 members who are not officers of the cooperative. The document outlines functions of internal auditing like evaluating risk management and controls, reviewing compliance, and assessing goals. It also discusses boards' responsibilities for internal controls and monitoring the internal audit function. Finally, it covers powers of internal audit committees and requirements around external audits.

1. Co-operative Audit
Dr Hayati Md Salleh
hayatimsalleh@gmail.com

2. Definition of Internal Auditing
• Internal auditing is an independent, objective
assurance and consulting activity designed to
add value and improve an organisation’s
operations. It helps an organisation
accomplish its objectives by bringing a
systematic , disciplined approach to evaluate
and improve the effectiveness of risk
management, control, and governance
process. (IIA)

3. Internal Audit Committee
• Section 42A
• (1) board shall establish IAC of not less than 3,
not more than 5
• (2) the duties and responsibilities shall be
provided by the bylaws
• (3) members of IAC are not officers of a co-
operative

4. Internal Audit Committee
• Corporate governance requires a strong
internal control system
• Internal audit has to provide independent,
objective evaluation of the system of internal
control
• The key role is to assist the board in
discharging its governance responsibilities
(KPMG)

5. Functions of Internal Audit in
Corporate Governance (KPMG)
• An objective evaluation of the existing risk and
internal control framework
• Systematic analysis of business processes
• Reviews of the existence and value of assets
• A source of information on major frauds and
irregularities
• Ad hoc reviews of other areas of concern,
including unacceptable

6. Functions of Internal Audit in
Corporate Governance (KPMG)
• Reviews of the compliance framework and
specific compliance issues
• Reviews of operational and financial performance
• Recommendations for more effective and
effective use of resources
• Assessments of the accomplishment of corporate
goals and objectives
• Feedback on adherence to the organisation’s
value and code of conduct/code of ethics
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7. Board’s Responsibility for
Internal Control
• Assessing the scope and effectiveness of the
system established by management to identify,
assess, manage and monitor the various risks
arising from the organisation’s activities
• Ensuring senior management establishes and
maintain adequate and effective internal controls
• Ensuring that appropriate controls are in place for
monitoring compliance
• Monitoring and reviewing the effectiveness of the
internal audit function

8. Board’s Responsibility for
Internal Control
• Reviewing and assessing the internal audit
plan and progress
• Ensuring that the internal audit function is
adequately resourced and enjoys appropriate
standing within the organisation
• Considering management response to major
internal audit recommendations and progress
in their implementation

9. Powers and Duties of IAC
• UUK 52(1) JAD mempunyai kuasa memeriksa
segala rekod bagi memastikan hal-ehwal
koperasi dijalankan mengikut matlamat
penubuhan, UUK , keputusan mesyuarat
agung
• UUK 52(2) JAD mempunyai kuasa untuk
memanggil mana-mana orang untuk
mengemukakan apa-apa maklumat
• UU52(3) tugas JAD

10. Eligibility for Appointment to IAC
• UUK 50

11. Term of Office
• UUK 51 tempoh perkhidmatan JAD adalah
satu tahun
• Kekosongan dalam JAD hendaklah diisi oleh
lembaga dalam tempoh 60 hari

12. External Audit
• Section 60

13. Appointment of External Audit
• Section 61 approval of auditor of co-operative
• Section 62 disqualifying a person from being a
co-operative auditor

14. Duties of the Auditor
• Section 63