Internal audit
Financial Dictionary — Auditing
Definition
An independent function within an entity that evaluates risk management, controls, and governance.
Detailed Explanation
Internal audit is an independent and objective assurance activity that evaluates internal controls, risk management, and governance processes.
Common Uses
- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
Practical Example
- Example: The auditor references **Internal audit** when designing procedures and documenting conclusions in the audit file.
Why This Term Matters
- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.