Internal Auditing is an activity which is independent, object oriented and consulting in nature. It is a specific part of managerial work, which helps management for conducting operations and evaluating risk, governance process in an effective and efficient way to accomplish entity’s objectives. Assessing Internal Auditing is intensively beneficial for moderate or big size firms, which contain multi hierarchy departments.
Legal Aspect Of Internal Auditing :
- Section 292A of the Companies Act, 1956 - requires public companies having paid up capital not less than Rs. 5 crores to constitute a committee of the Board, i.e., the Audit Committee. In terms of sub section 5 of the said Section, the internal auditor is required to attend and participate at the meetings of such Audit Committees.
- As per the SEBI guidelines, Clause 49 of Listing Agreement provides for responsibility of audit committee to review adequacy of internal audit function and internal audit reports
- Internal Audit also emphasizes over the compliance procedures.
- Internal Audit meant for prevention the error and fraud at the grass route level instead of detection them.
- The whole purpose is for value addition in the field of risk management, accounting, internal controls and organization at the whole.