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Internal Audit Definition and Objectives

Internal Audit is an independent appraisal function established by the management of an organisation and has two clear objectives:

1. To provide independent assurance to both the Audit Committee and Management on the adequacy and effectiveness of the governance, risk management and control arrangements in place to achieve the strategic and business objectives, including:

  • Internal Controls
  • The effectiveness of operations
  • The economical and efficient use of resources
  • Compliance with applicable policies, procedures, laws and regulations, and contracts
  • Safeguards against losses, including those arising from fraud, irregularity or corruption
  • Risk Management
  • The integrity and reliability of information and data.

2. To work in partnership with the business to provide challenge, advice and support in improving business processes and controls. To this end, each internal audit assignment aims to contribute to the improvement of governance, risk management and control processes. Internal Audit may also provide consultancy services as part of its routine activities and/or in response to requests by management in order to improve governance, risk management and control.

Authority

Internal Audit operates with the direct authority of Kildare County Council and under general supervision and guidance of the Chief Executive. It is empowered and authorised to audit all systems and activities within the Authority managed by the Chief Executive and has unrestricted access to all records, reports, personnel, consultants, I.C.T systems and assets, for audit purposes. Management and staff are required to assist Internal Audit in the fulfilment of its functions and to provide all the information and explanations required by Internal Audit staff for the proper performance of their duties.

Audit Committee

The current Audit Committee was established by resolution of the Council dated 22nd September 2014 and consists of seven members, four external members and three serving Councillors. The Audit Committee has an independent role in advising the Council on financial reporting processes, internal control, risk management and audit matters, as part of the systematic review of the control environment and governance procedures of the Council. The Committee provides objective advice plus recommendations on the work of the Internal Audit Unit. The Audit Committee meet five times per year.

Checking & Reporting

The primary function of checking is to reconcile monies received with lodgements made to the bank. Internal Audit had traditionally carried out checking in all areas where cash was handled by employees within the Council. However, as this was deemed to be a function of management, this function has reverted to each section. Internal Audit now spot check that local management are following their own checking procedures and that such procedures are highly functioning.

The Anti-Fraud and Corruption Policy

The Anti-Fraud and Corruption Policy document was launched in July 2005 and can be viewed by clicking on the following link: http://kildare.ie/CountyCouncil/internalaudit/Anti-FraudandCorruptionPolicyDocument/

NOAC: The National Oversight & Audit Commission

The National Oversight & Audit Commission, established in July 2014, is a statutory body established by Ministerial order under section 126B of the Local Government Act 2001, to oversee the local government sector and more information can be viewed by clicking on the following link: http://kildare.ie/CountyCouncil/internalaudit/NOAC-NationalOversightAuditCommission/National%20Oversight%20Audit%20Commission.pdf

Audit Committee Charter and Function

The Audit Committee Charter and Function can be viewed by clicking the following link:

http://kildare.ie/CountyCouncil/internalaudit/AuditCommitteeCharterFunction/KCC%20Audit%20Committee%20Charter%202016%20v1.3%20FINAL-signed.pdf

Internal Audit Charter

The Internal Audit Charter can be viewed by clicking the following link:

http://kildare.ie/CountyCouncil/internalaudit/InternalAuditCharter/KCC%20Final%20Internal%20Audit%20Charter%202016-signed.pdf

Annual Reports

Annual Reports can all be viewed by clicking the following link:

http://kildare.ie/CountyCouncil/InternalAudit/AnnualReports/

The Role of the Internal Audit and Checking Department

Introduction

One of the changes introduced in the modernisation of Local Government with Better Local Government (B.L.G.) was the establishment of an Internal Audit and Checking Department in each county.  Formerly in Kildare there had been a checking function but this was now expanded to include the Internal Audit function.

The primary role of Internal Audit is to be part of the overall governance and control environment in the Kildare Local Authorities and provide independent assurance to the Manager that all significant operating risks are identified, managed, and controlled effectively at reasonable cost. 

In establishing the Internal Audit Department a number of documents were produced.  Following extensive consultations, an Internal Audit Charter, Strategic Plan and Annual Audit Plan were agreed and adopted.  The latter two plans were recently reviewed and the amended versions adopted.

For those seeking an understanding of what Internal Audit is about, these three documents are an excellent starting point and provide an expanded clarification of the Institute of Internal Audit’s definition of Internal Audit, which reads as follows:

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations.  It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.”

The Internal Audit operating strategy is based on the principles set out in the Internal Audit Charter. After the incoming Council has adopted the Corporate Plan, the Strategic Audit Plan is prepared, and aims to coordinate Internal Audit activity to the best effect and assist in the development of annual Internal Audit Plans for the period the Council is in office.  The annual Audit Plan sets out the programme of audits for the year and can also include audit related work such as liasing with other Departments on concerns that arise.

The Internal Audit Charter, Strategic Plans and Annual Audit Plans can all be viewed on the Internal Audit Section of the Intranet.

Role and Responsibilities of Internal Audit Department

Internal Audit is an independent appraisal function established by management for the review of the internal control system, as a service to the organisation, and to the overall benefit of the community. It objectively examines, evaluates and reports on the adequacy of internal controls to ensure the economic, efficient and effective use of resources. The Internal Audit Department performs its duties by:

  • Reviewing and appraising the adequacy, efficiency and effectiveness of all activities and systems of internal control on an independent basis.
  • Reviewing and reporting on compliance with policies, plans, procedures, laws and regulations. Verifying the existence of assets and reviewing the means of safeguarding assets and their value.
  • Promoting effective control at reasonable cost and recommending operating improvements where appropriate with regard to Value for Money (VFM), best value and similar audits.
  • Reporting on EU audits and compliance with grant regulations and procedures.
  • Liaising with External Audit to ensure that internal and external work is complementary and to avoid unnecessary duplication.

To ensure the independence and objectivity of the Internal Audit function, the Department has no direct responsibility or authority for activities of operations that may be audited or reviewed. Internal Audit staff shall adhere to the standards and guidelines for the professional practice of internal auditing as issued by the Institute of Internal Auditors. Its staff shall operate to the highest standards of integrity and maintain confidentiality over information obtained in the course of their work.

The Internal Audit Department is granted full and complete access to all of the Kildare Local Authorities manual and computerised records, physical properties and personnel relevant to carrying out its role and responsibilities.