Internal Auditing Function of an Organisation

Final Year Project Synopsis

On

Understanding the internal control mechanism of a manufacturing system with respect to an efficient internal audit function.

Prepared by

DIVYA JAIN

MBA - Batch-2009-11

Roll no.-09810021

Under the kind Guidance of

PROF J P SINGH

DoMS, IIT Roorkee

As a partial fulfillment of MBA program at IIT Roorkee

INDIAN INSTITUTE OF TECHNOLGY ROORKEE

ROORKEE

INTRODUCTION TO INTERNAL AUDITING

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.

The scope of internal auditing within an organization is broad and may involve topics such as the efficacy of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets, and compliance with laws and regulations.

Internal auditing frequently involves measuring compliance with the entity's policies and procedures. However, internal auditors are not responsible for the execution of company activities; they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities. As a result of their broad scope of involvement, internal auditors may have a variety of higher educational and professional backgrounds.

The internal audit can improve the process efficiency, with the subsequent or immediate improvement actions on inefficient process found during the audit. If internal audit is focused on continual improvement, is a value added tool and can consider: redefinition of quality objectives, set-up of improvement goals, preventive actions, reallocation of resources, reduction of non-quality...