Operational auditing

Résumé du document

According to the Institute of Internal Auditors, Internal Auditing could be defined as "an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes". Internal auditing, which is therefore a process, usually involves three distinct identities: "the process owner" (who owns the company), "the internal auditor" (the person who is delivering his evaluation), "the user" (who is going to use the evaluation). The goal of an operational auditing is to ensure that financial reporting complies with the accounting principles broadly accepted. Compliance is therefore a key concept in operational auditing. "Audits based on compliance focus on the adequacy and effectiveness of management controls governing adherence to external laws and regulations" (definition of compliance given by COSO, The Committee of Sponsoring Organizations of the Treadway Commission).

Extraits

[...] I - DESCRIPTION OF INTERNAL AUDITING FUNCTIONS Who uses Internal Auditing/ Who performs it? Internal Auditing definition "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" (The Institute of Internal Auditors). Who uses it? Who performs it? Internal auditing is accomplished in every company. This activity is compulsory and is legally defined. [...]

[...] The persons who makes an internal auditing endorse and are hold responsible if there is a mistake. Internal Audit as well as Internal Control assess the system Internal auditors play a leading role in assessing control systems and participate to its effectiveness. Indeed, internal auditors enjoy a situation of power that enable them to be listened. Internal auditing may be done by a company like the big four (Deloitte, PricewaterhouseCoopers, Ernst&Young . ) in order to ensuring the compliance with the internal control. [...]

[...] What is the relation between Internal Control and Internal Auditing ? The responsibility for the production of reliable financial reporting differs Internal Control may promote the reliability of financial reporting. What is more, Internal Control helps to indicate if the company abides by accounting principles in effect. It is not an absolute process. "Internal control is, to some degree, the responsibility of everyone in an organisation" (COSO). At the opposite, Internal auditing ensures the compliance of financial reporting with standards and guarantees for it. [...]

[...] There is a will to meet an international convergence of the accounting rules. The trend is to develop compatible financial reports for companies: "At a joint meeting in September 2002, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) agreed to work together to develop high quality, fully compatible financial reporting standards that could be used for domestic and cross-border reporting; this cooperative effort is sometimes described as international convergence of US generally accepted accounting principles (US GAAP) and IFRS financial reporting standards" (Schipper Katherine). [...]

[...] It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes". Internal auditing, which is therefore a process, usually involves three distinct identities: "the process owner" (who owns the company), "the internal auditor" (the person who is delivering his evaluation), "the user" (who is going to use the evaluation). The goal of an operational auditing is to control that financial reporting comply with the accounting principles broadly accepted. Compliance is therefore a key concept in operational auditing. [...]