Internal Audit Activities as a Support to Governance Processes

Lately, the role of internal audit is viewed with great importance in the context of the supervisory mechanisms of corporate governance, which is a direct result of requests for more effective corporate governance and the need for control. Corporate governance foundation may be considered through the four cornerstones: Audit Committee, Executive Management, Internal Auditors and External Auditors. Internal audit contributes to corporate governance effectiveness through relations and communication with other cornerstones. It is believed that by providing assurance on the effectiveness of risk management, control and governance processes, internal audit is becoming a "key cornerstone" underlying the effective management. This paper analyzes how internal audit contributes to strengthening the governance processes through its relation with the primary beneficiaries, managers and the Audit Committee. The Audit Committee, focused on oversight of financial reporting, controls and risk management, relies on internal audit to assist in carrying out its responsibilities. Also, internal audit provides advice to managers at all levels and information related to the effectiveness of the internal control and risk management processes as well as other important services. It may be concluded that internal audit activities, through its impact on other participants in governance, affect the quality of corporate governance. Internal audit is an important factor in achieving effective governance and is considered as an "integral part of corporate governance mosaic".