7 key issues that should be covered in partnership agreement

5 disadvantages of having internal audit function.

Internal audit is independent  advisory and consultancy function established by management of the entity to monitor internal control and help manage risk. Internal audit function is independent in the sense that it does not involve in day to day activities of the entity.

Disadvantages of internal audit may include:

  • Cost, by establishing internal audit function management will incur cost to pay internal auditor and other running cost of the department.
  • internal audit does not provide assurance on the fairness and truth of financial statement.
  • Since internal auditors in many cases are employees of the entity their independence can be threatened by interference from management, hence reducing their effectiveness. This may be reduced by ensuring that internal auditors are reporting to highest person or body in the entity.
  • Internal audit is not requirement for any entity, it is just conducted to add value to entity’s operations.
  • Qualification of internal auditors are not determined by statutes therefore their competence is not monitored. 
  • Cost, by establishing internal audit function management will incur cost to pay internal auditor and other running cost of the department.
  • internal audit does not provide assurance on the fairness and truth of financial statement.
  • Since internal auditors in many cases are employees of the entity their independence can be threatened by interference from management, hence reducing their effectiveness. This may be reduced by ensuring that internal auditors are reporting to highest person or body in the entity.
  • Internal audit is not requirement for any entity, it is just conducted to add value to entity’s operations.
  • Qualification of internal auditors are not determined by statutes therefore their competence is not monitored. 

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