By conducting a thorough review of the organisation’s management, through the examination of performance, records and statements. auditing allows for identification of pitfalls and their consequent rectification thereby facilitating maximization of shareholder’s value. Auditing usually occurs at the internal and external levels. The internal audit is conducted by an audit team that is part of the organisation, which reports to senior management team of the organisation. External auditors on the other hand report to the organisation’s shareholders with the main purpose being to improve the validity and reliability of the internal audit outcomes.
Internal audit serves just as an important function to the shareholders as external auditing does. The process identifies organisational outcomes thereby facilitating the development of a framework and mechanisms through which organisational processes can be restructured and made more effective to facilitate the attainment of organisational objectives. However, in order to achieve this goal, the internal audit process must itself be an effective one. The effectiveness of internal auditing can be maintained by adhering to particular codes of conduct. One of the most important factors for effective auditing is that it must be independent from the activities and operations that it evaluates (CIIA, 2014). The CIIA prescribes that to facilitate the independence of the internal auditing team. the chief internal auditor should serve at a senior capacity within the organisation (2013). Such a position furnishes him/her with the standing and authority to challenge the executive. Moreover, the CIIA further contends that the audit team should have access to all managerial decision-making forums (2013). The independence of the internal audit team is facilitated by the recruitment of independent individuals.