Heads of the company and the director of internal audit have to remember that objectivity of the internal auditor in big degree is influenced by internal culture and a situation in the company. If the management is intolerant of mistakes and shortcomings, that is risk that work of the internal auditor will be reduced eventually to identification of the persons which made a mistake, but not to identification and the solution of the problem.
It is important to notice that the management of the company, not internal auditors, are responsible for creation and maintenance of reliable and effective system of internal control. The main objective of internal audit - to help managers of the company to carry out effectively the duties assigned to them, to give to managers of the company sufficient confidence that assets of the company are used in the most effective way for the achievement of the objectives and tasks facing the company in general and its separate divisions.
The purposes, powers and responsibility of department of internal audit at a stage of its creation have to be issued in the form of the written document approved by the management of the company and approved by Board of directors. This document will allow to provide the special organizational status, independence and isolation of department that, in turn, guarantees justice and impartiality of judgments of his employees. The head of the internal audit department has to submit directly to the head of the company or other official allocated with the powers sufficient for ensuring independence of actions of auditors and for acceptance adequate measures for the revealed shortcomings.
Speaking about internal control, it is important to realize that it is useful only if is directed on achievement of specific goals, and before estimating results of control, it is necessary to define these purposes. There are five main objectives of internal control:
In the large companies the intermediate option is possible: the manager on internal audit of division can submit to both the director of internal audit, and the finance director of division. It is necessary to notice that the shared responsibility for a condition of internal control in the company is born, as a rule, by the finance director.
Policy: it is approved at the level of the management according to the purposes and tasks of the organization and it is published in writing, is brought to the attention of employees, it is periodically reconsidered and updated as required.
Thus, the concepts "independence" and "objectivity", being rather faithful characteristics of internal audit, differ that the first is defined in an organizational context, and the second - as professional quality of the internal auditor. Both concepts are interconnected as degree of structural independence of department of internal audit has essential impact on objectivity of internal auditors. However, also how internal auditors see the role in the company is important and whether they are ready professionally and competently to perform the work.
Internal control is the process directed on achievement of the objectives of the company, and which is result of actions of the guide to planning, the organization, monitoring of activity of the company in general and its separate divisions. Managers of the company have to set, first, the objects and define tasks of the company and separate divisions and construct the structure of the organization corresponding to it. And, secondly, to provide functioning of effective system of documenting and the reporting, division of powers, authorizations, monitoring for achievement of goals and the solution of the standing tasks.