An overview of Internal Audit Series 100 and 200

The four components (forming the pillars) of the framework are:

(i) Basic Principles of Internal Audit: Independence, Integrity and Objectivity, Due Professional Care, Confidentiality, Skills and Competence, Risk Based Audit, Systems and Process Focus, Participation in Decision Making, Sensitive to Multiple Stakeholder Interests, Quality and Continuous Improvement

(ii) Key Concepts: are in nature of Internal Controls, Risk Management, Governance Processes, Compliance with Law and Nature of Assurance

(iii) Standards on Internal Audit (SIAs): These pronouncements are designed to help the internal auditor to discharge his responsibilities

(iv) Guidance Notes: These guidelines are important for implementation of the SIAs and provide clarification

(a) A three-party relationship, involving an Internal Auditor, An Auditee and Assurance User (e.g., the Audit Committee of the Board of Directors);

(b) Presence of three key elements, involving a Subject Matter, a Pre-defined criteria, and a Conclusive Outcome; and

(c) A written Assurance Report which expresses an opinion in a standard format.

Key Elements - Subject Matter for achieving stated objectives as outlined in
the scope of the audit are the Subject matter of an assurance which may take many forms:

(a) Financial performance or conditions (for example, the financial position, financial performance and cash flows).
(b) Non-financial performance or conditions (for example, operational output of a factory)
(c) Physical characteristics (for example, capacity of a facility)
(d) Systems and processes (for example, an entity's internal controls, or IT system)
(e) Procedural compliance (for example, corporate governance, compliance with regulation, human resource practices) 

An Internal Auditor may undertake an assurance assignment only
preliminary knowledge of the assignment circumstances indicates that:

(a) Relevant ethical requirements, such as independence and professional competence will be satisfied, and

(b) The assignment exhibits all of the following characteristics:

(i) The Subject matter is appropriate

(ii) The Pre-defined criteria to be used are suitable

(iii) The Auditor has access to evidence to support the auditor's opinion;

(iv) The Internal Auditor's opinion, is to be contained in a written report; and    

(v) The Internal Auditor is satisfied that there is a rational purpose. Circumstances that may indicate an absence of rational purpose: Significant limitation on the scope of the internal auditor's work; Assurance user intends to associate the auditor's name with the Subject matter in an inappropriate manner. 

Internal Controls are systemic and procedural steps adopted by an organisation to mitigate risks, primarily in the areas of financial accounting and reporting,  operational processing and compliance with laws and regulations. This Standard  is to clarify the responsibilities of management and auditors over Internal Controls (IC's) and how certain requirements need to be met to assess, evaluate, report and provide an independent assurance over Internal Controls.  ICs mitigate the risk of financial exposure, they are also referred to as Internal Financial Controls (IFCs) and when they mitigate operational risks, they are also referred to as Operational Controls (OCs)

Internal Controls can be broad-based covering the whole entity (e.g., Code of Conduct), or focused to a specific process or area (e.g., Order processing or Payroll, etc.). In the former case they are generally referred to as 'Entity Level Controls (ELCs)' as part of the 'Control Environment' and in later referred to as 'Process Level Controls (PLCs)' 

(a) Define the overall plan, scope and methodology of the IA Function on a periodic basis.

(b) proper planning, execution, reporting of findings and subsequent closure of reported observations.

(c) Plan, acquire, engage and review the performance, training and development of professional staff and other resources to achieve it's objectives.

(d) Identify, source, engage and manage external experts and technical solutions, if required.

(e) Communicate with all key stakeholders regarding progress and achievement of objectives.

(f) Develop and maintain a quality evaluation and improvement program

(g) Quality of the work performed for reporting and is supported by evidence and documentation further work is conducted in conformance with the Standards on Internal Audit

The purpose of defining the Objectives of Internal Audit are to:
(a) Document the formation and functioning of the Internal Audit activity and the terms of the outsourced internal audit arrangement; Record Internal Audit Charter and Engagement letter

(b) Provide clarity to the Internal Auditor and its stakeholders regarding the nature of the internal audit set-up and its working;

(c) Ensure linkage between what is expected of the Internal Auditor and how those expectation can be met within the Framework governing Internal Audits; and

(d) Promote better understanding on key operational areas, such as, accountability and authority, roles and responsibility, and such other functional matters.

(a) Details of procedures conducted to validate the requirements of an Expert.

(b) Details of procedures conducted to validate the Independence and Objectivity of the Expert.

(c) Details of procedures conducted to verify the Qualifications and Credentials of the Expert.

(d) Details of procedures conducted to define the Scope, approach and work plan of the Expert.

(e) A summary of the review completed to evaluate the quality and reliability of the work completed