TIAPS Module 1 Audit and Assurance workbook

C.2 Auditing Governance
The IIA Supplement Guidance: The Role of Auditing in Public Sector Governance
emphasizing the essential characteristics of the internal audit function for providing valuable
assurance insight:
• Organizational independence.
• A formal mandate (in “the public sector’s constitution, charter, or other basic legal
document.”)
• Unrestricted access “to employees, property, and records.”
• Sufficient funding.
• Competent leadership.
• Objective staff.
• Competent staff.
• Stakeholder support.
• Professional audit standards. 50
In respect of governance, internal audit may contribute in various ways:
• Oversight: Internal audit can extend the reach of senior management and the
governing body to observe organizational activities and circumstances and determine
whether policy is being implemented as intended with appropriate assessment of
risks and implementation of controls. Auditing provides transparency through
verification of performance, position, and prospects, and by sharing it with
stakeholders.
• Detection: Audits reveal “inappropriate, inefficient, illegal, fraudulent, or abusive acts
that have already transpired.” Such information can be used to strengthen controls,
initiate training, and pursue disciplinary or legal proceedings. Detection can occur as
part of an investigation of potential conflicts of interest or suspected wasteful,
abusive, or fraudulent activities. Alternatively, detection also occurs when red flags
are identified during a routine engagement involving the identification of risks and
testing of controls.
• Deterrence: Anticipated audit work as well as the exposure of detected weaknesses
can deter other lapses in proper oversight and management.
• Insight: Auditors can share their expertise and understanding and make
recommendations in terms of potential improvements with reference to best
practices.
• Foresight: Auditors can also anticipate future risks by considering trends as well as
changes in legislation and regulation. 51
Organizational governance may be audited in an individual engagement. Alternatively, an
opinion on governance may be derived from multiple engagements (see C.1.5). Assurance
and advisory engagements may be used. Any engagement that considers risk management
and internal control contributes to an auditor’s understanding of governance.
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Supplemental Guidance: The Role of Auditing in Public Sector Governance, The IIA, 2012.
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Supplemental Guidance: The Role of Auditing in Public Sector Governance, The IIA, 2012.
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