Question

Ideally, the head of of internal auditing (chief audit executive) should ______.

Answer 1

The head of internal auditing or chief audit executive should assure the effectiveness of the company's risk management, control, and governance processes, act independently, and maintain open communication with the board of directors.

Step-by-step explanation:

Ideally, the head of internal auditing, often referred to as the chief audit executive, should provide independent and objective assurance and consulting services designed to add value and improve an organization's operations. This includes bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

The primary duties often also involve coordinating with the board of directors, external auditors, and management to ensure that the company's financial and operational activities are conducted with integrity and are in compliance with applicable laws, regulations, and internal policies.

In lessons learned from historical corporate governance failings, such as the case of Lehman Brothers, it's clear that the role of the chief audit executive is crucial in preventing the provision of inaccurate financial information to investors and other stakeholders. The chief audit executive should act independently from management to ensure objectivity, and should have direct communication with the board to ensure significant findings or concerns are reported without management filtering or bias.

Answer 2

The head of internal auditing, or chief audit executive (CAE), should have a strong understanding of internal control systems and risk management, possess good communication skills, and be independent and objective. They are responsible for evaluating internal controls, identifying weaknesses, and providing recommendations for improvement.

Step-by-step explanation:

The head of internal auditing, also known as the chief audit executive (CAE), should ideally have certain qualities and responsibilities. Firstly, the CAE should have a strong understanding of internal control systems and risk management in order to ensure the accuracy and reliability of financial records. Secondly, the CAE should possess good communication and interpersonal skills, as they often have to interact with various stakeholders within the organization. Lastly, the CAE should be independent and objective, ensuring that they can provide unbiased evaluations and recommendations to improve the company's operations.

For example, the CAE may develop and implement an internal audit plan to assess the effectiveness of internal controls and identify any weaknesses or areas for improvement. They may also conduct regular meetings with management to discuss audit findings and provide recommendations for mitigating risks.