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Independent Auditor’s Assessment Critical in Ensuring Internal Audit Quality

The International Institute of Internal Auditors (IIA) emphasizes the importance of independent assessors and assessment teams in evaluating the competence of internal auditors to ensure the quality and independence of internal audit activities.

Criteria for Independent Assessors and Assessment Teams

According to IIA standards, an independent assessor or assessment team must not have any real or apparent conflict of interest and should not be part of, or under the control of, the organization whose internal audit activity they are assessing. This ensures that the evaluation is unbiased and free from external influences.

Chief Audit Executive’s Role in Ensuring Quality

The chief audit executive (CAE) plays a crucial role in ensuring the quality of internal audits by:

  • Communicating the results of the quality assurance and improvement program to senior management and the board.
  • Establishing a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization’s goals.

Internal Audit’s understanding and identification of risks and control issues should be included in the scope of the quality assurance review, which may require the use of resources from external parties. The results of these assessments should be presented directly to the Audit Committee at least annually.

Importance of External Assessment

The IIA recommends that the Audit Committee obtain an independent and objective external assessment at appropriate intervals, which could take the form of:

  • Periodic reviews of elements of the function.
  • A single review of the overall function. The Chairman of the Audit Committee should oversee and approve the appointment process for the independent assessor.

Conclusion

The article highlights the importance of internal audit’s independence in ensuring the quality of its activities. The use of independent assessors and assessment teams is crucial in evaluating the competence of internal auditors and identifying areas for improvement.