The task of raising the level of corporate governance (CG) is equally relevant for both American and foreign companies. As the market and market infrastructure in Russia develops, it is the quality of corporate governance and transparency of financial statements that will become the criteria that investors and lenders will be guided by when choosing objects for investment.
One of the links in the company’s corporate governance system is internal audit. The presence of an internal audit is a positive signal for potential investors and lenders and increases the investment attractiveness of the company. For the corporate audit services this is important now.
Customers (clients) of internal audit
- First of all, consider the question of who the main users of the results of the internal audit work
- Internal audit is a service function whose customers (customers) are
- Members of the board of directors (audit committee2) or similar body
- Senior executives of the company
Linear (operational) management of the company
Customers (clients) of each of the above categories have their own understanding of what internal audit should do in a company and its priorities in relation to the directions of internal audit activities. In some situations, priorities and expectations vary slightly, but sometimes quite significantly.
For members of the board of directors, the internal audit activities are more important, that is independent checks of the reliability and efficiency of systems and processes in a company. From the point of view of line management, the greatest value of internal audit is the ability to get advice on improving the efficiency of business processes for which line management is responsible. Top executives are interested in both internal audits assisting line management in the performance of its functions, and in helping it monitor the activities of line management.
If at the same time the internal audit focuses solely on the provision of guarantees to the board of directors, then it is likely that it will be perceived by the company as a “watchdog”, ensuring that management properly performs its duties. If internal audit will be devoted to management consulting for a significant portion of the time, this may lead to a loss of audit objectivity. Therefore, the company’s management must decide what ratio between the provision of guarantees and advice from internal audit is optimal for the company, taking into account the goals of the board of directors and the objectives of management.
If we talk about the comparative importance for different groups of customers (clients) of the role of internal audit in various areas, then for boards of director’s internal control and safety of assets are most important, for top management the sphere of risk management, for linear management – improving the efficiency of specific business processes.