accounting information thereby enhancing confidence of investors or third parties (core purpose of audit). Independence is the logo of professional auditing and refers to the freedom of auditors from any undue influence of those that may have financial interest in the activity being audited. Both internal and external audits must be independent and devoid of bias with respect to the client or else the audit will lack the neutrality necessary for its dependability. In the cases of Enron and Parmalat, external auditor’s independence was dishonoured. Internal auditors must be independent both by status and professionalism from internal operations (audited activities) while external auditors must act independent of the client via legal rights
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Auditors are required to have great expertise to enable them to provide advice on the wide scope of main control goals. In WorldCom, the fraud scheme was capacitated by understaffed internal audit department. The company had only 35 internal auditors instead of 100 in line with telecomm industry average. The desire to reduce audit fees (with consequent inadequate resourced audit/inadequate work being done) should not overshadow the need for a quality audit. With reference to WorldCom, the internal audit unit was not adequately staffed and did not have access to all the information they required. Internal and external audit perform separate functions and report separately to the Board/Audit Committee to promote independence which assures of audit with broad coverage, suitable action on audit findings and sufficient deliberation on the findings. While internal audit works in line with the standard set mainly by the Institute of internal auditors (IIA), the work of the external auditor is guided by various Auditing Practices Board requirements. Furthermore, whereas the appointment of external auditors is undertaken by Directors, internal auditors are usually members of the organisations and both must be properly resourced to function
Auditors are required to have great expertise to enable them to provide advice on the wide scope of main control goals. In WorldCom, the fraud scheme was capacitated by understaffed internal audit department. The company had only 35 internal auditors instead of 100 in line with telecomm industry average. The desire to reduce audit fees (with consequent inadequate resourced audit/inadequate work being done) should not overshadow the need for a quality audit. With reference to WorldCom, the internal audit unit was not adequately staffed and did not have access to all the information they required. Internal and external audit perform separate functions and report separately to the Board/Audit Committee to promote independence which assures of audit with broad coverage, suitable action on audit findings and sufficient deliberation on the findings. While internal audit works in line with the standard set mainly by the Institute of internal auditors (IIA), the work of the external auditor is guided by various Auditing Practices Board requirements. Furthermore, whereas the appointment of external auditors is undertaken by Directors, internal auditors are usually members of the organisations and both must be properly resourced to function