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Internal Audit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Internal Audit

  • This topic has 2 replies, 3 voices, and was last updated 7 years ago by Ken Garrett.
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  • Author
    Posts
  • October 17, 2015 at 7:24 am #276755
    anu1234
    Member
    • Topics: 78
    • Replies: 65
    • ☆☆

    Internal auditors does the administrative reporting to senior mgt and functional reporting to audit committee.

    Can you give some examples for admin & func reporting

    October 17, 2015 at 12:56 pm #276863
    cuteleo110
    Member
    • Topics: 7
    • Replies: 385
    • ☆☆☆

    A functional reporting relationship establishes a connection between positions or organizational units at different management levels based on the specialized nature of the function for which a mutual responsibility is shared. Though it is not always clear, generally the functional reporting relationship is stronger than the administrative one, because the functional body controls the individual’s compensation and evaluations.
    According to the IIA’s Practice Advisory 1110-2, report functionally means that the governing authority would:

    ? Approve the overall charter of the internal audit function, the risk assessment, and the
    related audit plan;

    ? Receive communications from the results of internal audit activities or other matters that the CAE determines are necessary, including private meetings (executive sessions)
    without management present;

    ? Approve all decisions regarding the appointment or removal of the CAE including
    approving the annual compensation and salary adjustment of the CAE; and

    ? Make appropriate inquiries of management and the CAE to determine whether there are scope or budgetary limitations that impede the ability of the internal audit function to
    execute its responsibilities

    In contrast, administrative reporting is the reporting relationship within the organization’s
    management structure that facilitates the day-to-day operations of the internal audit function.
    Administrative reporting typically includes:
    ? Budgeting and management accounting;
    ? Human resource administration, including personnel evaluations and compensation of
    department staff;
    ? Internal communications and information flows; and
    ? Administration of the organization’s internal policies and procedures.

    October 17, 2015 at 3:47 pm #276889
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10194
    • ☆☆☆☆☆

    For F8 most of the time all you need to say is that internal audit reports to the audit committee.

    Admin reporting would be reporting on whether you had completed an IA assignment on time. However, the findings (eg a break-down in internal control) are the function or purpose of IA and that would be reported to the audit committee.

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