Vanessa D.

Nicol

BSAIS 3A

ASSESSMENT TASK 1

Activity I. Essay.

1. Even in small organization, should we need to have an internal audit function?

2. What should our internal audit function do?
3. What should be the mandate of the internal audit function?
4. How do you assess the effectiveness of your internal audit function?
5. Does internal audit have sufficient resources?

Internal Audit
Small organization or small businesses are privately owned corporation,
partnerships, or sole proprietorships that have fewer employees and/or less annual
revenue than a regular-sized business or corporation. Businesses are defined as
"small" in terms of being able to apply for government support and qualify for
preferential tax policy varies depending on the country and industry.

Small businesses are prone to risks especially if it is owned by sole proprietor since the
coming of funds is common in this business structure than in other business structures.
Therefore, small organization should have internal audit function for them to detect and
prevent errors, frauds and irregularities that may have been committed by the staff,
secure loans from the Banks and other Financial Institutions who insist on the audited
accounts, comply with the requirements of the Income Tax Act (Tax Audit under Sec.
44AB), receive compensation from insurance companies in case of losses by fortuitous
(1 answer)
events, and to have ideas on the maintenance of the books of account.

Internal Audit plays an important role and functions to businesses in achieving its
objectives and goals since it protecting the business assets, ensuring it that operating
effectively and securely store the data of the business or organization. Since
management in businesses needs to continually evaluate their activities, one of the
important function of IT Audit is it examines and sustain management controls and
improve the effectiveness of governance processes within IT sector. (2 answer)

Internal Audit shall provide independent, objective and relevant assurance and
consulting services designed to add value and improve the Company’s operations. It
must help the Company to accomplish its objectives by bringing a systematic,
disciplined approach to evaluate and improve the effectiveness of governance, risk
management and internal control systems and processes. Internal auditing is effective if
it provides the audit committee and executive management with the assurance they
need. This Mandate defines the functions, powers, duties and activities of the Internal
Audit. (3 answer)

I believe that in order to assess the effectiveness of Internal Audit function they must
have start with agreement among the head of function and audit committee on the goals
and objectives of the business activities. Ask the stakeholders whether they are
comfortable that they are receiving the assurance they need, when they need it, and in
a useful form on the risks that matter to them and to the organization to know if Internal
Audit function is effective. Then when you know, you will start a strategic plan on how it
(4 answer)
will become effective or maintain its effectiveness.

For me Internal Audit has sufficient resources since it is a great help for small business
not just for small business but also for any kind of business. But in order the internal
audit have sufficient resources it must have enough staff numbers and proficiency as
well as the staffs must positioned appropriately especially the ones who is the main
contact of the committee. When the internal audit function reports to the audit
committee, it allows the internal auditors to remain structurally separate from
management and enhances objectivity. (5 answer)
References:

https://www.mrpricegroup.com/MrPriceGroupCorporate/media/mrpgcorp/SiteAssets/201
8/Internal-Audit-mandate.pdf
Internal audit - Wikipedia