Recently, I participated in one of the workshops for heads of internal auditors from the county executives organized by the Public Sector Accounting Standards Board.
The gist of the training was to upgrade the skills of auditors in applying the International Professional Practices Framework at the counties. It emerged that the role of internal auditors in the public sector is indispensable.
The four pillars of good corporate governance are the board of directors (management), internal auditors, the audit committee and external auditors. Internal audit as a managerial tool is often referred to as the eyes and ears of the management.
This crystallises the importance of internal audit and emphasises the need for its independence. In any organisation, there are inherent risks that can ruin its reputation, corrode stakeholder confidence or at its worst, bring the organisation to its knees.
To manage these risks, the internal audit function plays a critical role in assessing governance, risk management and internal control processes.
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
To be effective in their work, internal auditors must focus on governance, risk and control.
The internal audit unit and activity must be seen to demonstrate integrity, competence and professionalism. The process must be independent, objective and free from undue influence.
It must align itself with the strategies, objectives, and risks of the organisation.
Besides, it should demonstrate quality and continuous improvement, provide risk-based assurance and promote organisational improvement. This is a great task that requires the internal auditor to be agile to keep abreast of the issues taking place in their environments.
The role of internal auditors has in the past been misconstrued. Initially, the perception was that internal auditors had to be accountants. Whereas accounting knowledge is indeed critical, it is not the default designation for internal auditors.
Regulation 154 of the Public Finance Management Act 2015 (County Governments) Regulations requires internal auditors to comply with the International Professional Practices Framework as issued by the Institute of Internal Auditors from time to time.
The regulation also directs auditors to follow policies and guidelines issued by Public Sector Accounting Standards Board to ensure uniformity and consistency across county government.
Regulation 153 requires the internal auditor’s to give reasonable assurance through the audit committee on the state of risk management, control and governance within the organisation.
For instance, the internal auditors should assess the appropriateness of structures, which facilitate accountability to stakeholders through integrity, leadership and transparency.
In a nutshell, internal auditors must be independent to successfully deliver on its function.
They must have unrestrained access to people, resources, and data required for them to be efficient and effective in their work.
In doing so, internal audit keeps governance in check through the competent application of systematic and disciplined processes and insight. Internal auditors report their findings to the governing body to promote continuous improvement.
