internal audit
Self-examination of finances
Internal audit is an independent review function within an organization that evaluates its operations, risk management, and internal controls.
Unlike external audits conducted by outside accountants, internal audits are performed by employees who report to management or the board: The internal audit revealed weaknesses in our expense approval process.
The goal is identifying problems before they become crises.
Formal records of transactions
- ledgerFinancial record book
- bookkeepingRecording financial transactions systematically
- reconciliationRestoration of friendly relations
- fraud detectionUncovering deceptive schemes
GAAP · materiality · forensic accounting · balance sheet · income statement · cash flow · journal entries · general ledger
Founding organizational document
- independenceFreedom from external control
- objectivityFreedom from personal bias
- fiduciary dutyObligation to act loyally
- ethicsStudy of right conduct
integrity · transparency · accountability · stakeholders · CAE
Research conducted on location
- testingExamining to evaluate
- samplingExtracting subset for study
- documentationWritten proof or instructions
- evidenceFacts supporting truth
Enforced rules and standards
- policiesAdopted courses of action
- proceduresSet methods for tasks
- adherenceFaithful following of something
- conformityAdherence to norms
legislation · statutes · legal requirements · accreditation · certification · whistleblower · code of conduct · non-compliance
Evaluating likelihood of harm
- financial riskPossible monetary loss
- inherent riskDanger native to activity
- risk appetiteCapacity for accepting uncertainty
- risk mitigationReducing exposure to threats
Formal permission granted
- access controlsRestrictions on entry rights
- safeguardsMeasures preventing harm
- walkthroughsComprehensive completion guides
financial statements
Formal records of transactions
- ledgerFinancial record book
- bookkeepingRecording financial transactions systematically
- reconciliationRestoration of friendly relations
fraud detection · GAAP · materiality · forensic accounting · balance sheet · income statement · cash flow · journal entries · general ledger · accounts payable
charter
Founding organizational document
- independenceFreedom from external control
- objectivityFreedom from personal bias
- fiduciary dutyObligation to act loyally
ethics · integrity · transparency · accountability · stakeholders · CAE
fieldwork
Research conducted on location
- testingExamining to evaluate
- samplingExtracting subset for study
- documentationWritten proof or instructions
evidence · interviews · observation · final report · recommendations
regulations
Enforced rules and standards
- policiesAdopted courses of action
- proceduresSet methods for tasks
- adherenceFaithful following of something
conformity · legislation · statutes · legal requirements · accreditation · certification · whistleblower · code of conduct · non-compliance · violations
risk assessment
Evaluating likelihood of harm
- financial riskPossible monetary loss
- inherent riskDanger native to activity
- risk appetiteCapacity for accepting uncertainty
authorization
Formal permission granted
- access controlsRestrictions on entry rights
- safeguardsMeasures preventing harm
- walkthroughsComprehensive completion guides
internal auditexternal audit
Outside accountant's formal examination
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