Abstract
The internal audit function traditionally establishes and continues its activities within the company, but it can also be provided by professionals outside the organization. Therefore, internal audit activities can be provided in three ways: the internal audit department established within the organization (in-house), the internal audit service provided by an audit firm (outsourcing), the joint operation of the internal audit department and the audit firm (co-sourcing). To choose the better approach for a company, the scale of the organization, the attitude and understanding of the management, and industry in which the company operates in must be taken into consideration. This study is a literature review that classifies the studies carried out on these methods that are used in performing internal audit activities.
TopInternal Audit
The IIA definition of internal audit activity is as follows: “Internal audit is an objective assurance and advisory activity designed to improve the activities of an organization and to add value to the activities of the organization.” Internal audit helps companies achieve their goals by bringing a disciplined and systematic understanding to evaluate and improve the effectiveness of risk management, control processes and governance processes (IIA, 2019).
Key Terms in this Chapter
Fraud: It is general term that explains intentional actions like deception, bribery, forgery, extortion, corruption, theft, conspiracy, embezzlement, abuse, and concealing important facts to mislead other parties.
In-House: Internal audit activities are carried out by the internal audit department within the company.
Assurance Services: They include the internal auditor's objective evaluation of the findings of the internal audit activities and the formation of an independent opinion.
Outsourcing: Obtaining the internal audit service from a professional person or organization from outside the company.
Consultancy Services: Providing the reliable advice to management in order to add value to business activities.
Independent Auditor: An expert who carries out audit activities, has professional knowledge and experience, can act independently and has high moral qualifications.
Financial Statement User: Persons in need of financial information such as business partners, lending institutions, investors, users of public financial information.
Internal Auditor: The person who monitors and evaluates whether the risk management and internal functioning processes of private companies or public institutions work effectively.