ACCA AAA ^UK Syllabus D. Audit of Historical Financial Information - Scope and limitations of Internal Audit - Notes ^{4 / 8}

Items such as

1. Effectiveness of systems

2. Effectiveness of Internal Controls

3. Whether manuals are followed

4. Whether internally produced info is reliable

5. Compliance with OECD

Oooh nice... What about limitations though?

• Reporting System

  Reporting to the Finance Director - who is responsible for some of the info being reported on!

  • Action

    Report to Audit Committee instead

• Scope of Work

  Could be decided by executive directors and thus influenced away from their particular areas (the cheeky monkeys)

  • Action

    Scope decided by chief internal auditor or audit committee

• Audit Work

  Auditing their own work (Self review threat)

  • Action

    Chief internal auditor doesn’t establish any controls herself
    (see how modern metrosexual I am... ;)

• Lengths of Service

  Too long in IA and there may well be a familiarity threat

  • Action

    Rotation of work into different areas

    So being an IA is basically just a crazy, roller-coaster of a life..

• Appointment of Chief Internal Auditor

  Don't let the CEO do it....!

  • Action

    Appointed by the whole of the board or Audit committee