Best practice in the internal audit

I think it’s basically saying ‘what does corporate governance say about what internal audit should do and how’s it structured’
In the BPP Book under ‘Internal audit and corporate governance’ the following is written:
Established codes of governance such as the UK Corporate Governance Code highlight the need for businesses to maintain good systems of internal control to manage the risks the company faces. Internal audit can play a key role in assessing and monitoring internal control policies and procedures.
The internal audit function can assist the board in other ways as well:
– By, in effect, acting as auditors for board reports not audited by the external auditors
– By being experts in fields such as auditing and accounting standards in the company and assisting in implementation of new standards.
– By liaising with external auditors, particularly where external auditors can use internal audit work and reduce the time and therefore the cost of the external audit.

One of the principles of the UK Corporate Governance Code that was set out is that The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles, and for maintaining an appropriate relationship with the company’s auditors.
Part of achieving this principle requires the audit committee to:
– Monitor and review the effectiveness of internal audit activities
– Where there is no internal audit function, to consider annually whether there is a need for this function and make a recommendation to the board.
– Where there is no internal audit function, to explain in the annual report the absence of such a function.

So in summary, the first set of bullet points demonstrate best practice in the operations of IA and the second set of bullet points refer to best practice in terms of the structure and ow it should function IMO.

Aleks