Internal Auditor and Head of the Internal Audit Function
Responsibilities, reporting lines, assessment criteria
Go to the Voluntary Audit serviceChecked against the official source:
The role of the head of internal audit differs from any other management position in one respect: its effectiveness cannot be assessed by the people whose work it reviews.
Reporting lines under the law
- the internal audit service of a joint stock company (JSC) reports to the supervisory board (Article 108 of the Law on Joint Stock Companies), or, where there is an audit committee, to that committee;
- the supervisory board appoints the service's staff and hears its reports every quarter;
- together with the executive body, the service reviews transactions with affiliated persons.
Area of responsibility
- Building the annual audit plan based on a risk assessment
- Organizing audits and controlling their quality
- Reporting results to the body to which the function is accountable
- Monitoring the remediation of identified deficiencies
- Developing methodology and the team's skills
Dual reporting
In practice, a model is used in which the head reports functionally to the owner or the supervisory board and administratively to executive management. This structure allows organizational matters to be resolved without sacrificing the independence of conclusions.
How to assess performance
Reasonable criteria are the share of deficiencies remediated, the plan's coverage of areas of real risk, and the absence of significant problems missed by internal audit and later found by an external audit. An unreasonable criterion is the number of audits.
Strengthen your internal audit function
We will help with methodology, team training and individual audits.
Go to the Voluntary Audit serviceFrequently asked questions
Is an auditor's qualification certificate required for this role?
The certificate under Articles 41–43 of ZRU-677 is required for performing external audits. It is not mandatory for the internal function, but a relevant qualification adds weight to the conclusions.
To whom does the head of internal audit report in a JSC?
To the supervisory board, or, where one exists, to the audit committee (Law on Joint Stock Companies).
Sources
- Закон «Об акционерных обществах и защите прав акционеров» — ст. 108, 109
Book a meeting with a Leader Audit partner
Your first consultation is free. Get an expert assessment of your business risks.