THE INTERNAL AUDIT COMMITTEE (IAC)
Practice Advisory 2060-2
“AUDIT COMMITTEE” - refers to the governance body that is charged with oversight of the
organization’s audit and control functions.
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The term is also intended to apply to other oversight groups with equivalent and responsibilities
such as trustees, legislatures bodies, owners of owner-managed entities, internal control
committees of full boards of directors
So, Practice Advisory 2060-2 defined audit committee as it refers to the governance body that is charged
with oversight of the organization’s audit and control functions. But we should take note that it does not
limit there since, other oversight groups with similar responsibilities, such as trustees, legislatures,
owners of owner-managed entities, and full boards of directors' internal control committees, are also
included in this definition as they have a comparable function
In this po, sina audit committee, madalas subcommittee sila ng board of directors wherein si BOD yun
yung committee at pumapailalim sila don. Yung members non nirerequire na dapat ay independent nonexecutive directors
INDEPENDENT NON-EXECUTIVE DIRECTORS
Definition:
Are board members who do not have roles in the day-to-day running of the company and do not have
any financial interest or other relationship.
They are an individual who is a director or member of the board of directors who does not have a
material or financial relationship with the company or related persons. The iNEDS’s role is to provide
independent oversight and constructive challenge to the executive directors.
In the Philippines
The independence of the Audit Committee is supported by SEC by issuing SEC Memorandum Circular no.
6 (Revised Code Corporate Governance) effective July 15, 2009 requiring certain entities to form an audit
committee consisting at least three (3) directors.
Na kung saan, mas prefer na meron silang accounting or finance background, dapat independent
director at may audit experience. Tapos yung chair ng audit committee or the chief audit executive ay
independent auditor din.
Di ba ilang beses na rin namang napag-usapan kung gaano kahalaga ang independency ng isang auditor
and it still goes in here. Basta auditor ka, you should keep in mind that before anything else, before
doing anything, you need to make sure that you are exercising independence not just because it is
considered as the cornerstone but because you are aware how it can affect your decisions and actions.
FUNCTIONS OF THE AUDIT COMMITTEE
ASSIST the BOARD
PROVIDE OVERSIGHT
PERFORM OVERSIGHT FUNCTIONS
REVIEW the ANNUAL INTERNAL AUDIT
DISCUSS with the EXTERNAL AUDITOR
ORGANIZE AN INTERNAL AUDIT DEPARTMENT
MONITOR and EVALUATE the CORPORATION’s INTERNAL CONTROL SYSTEM
REVIEW the REPORTS
Functions of the Audit Committee
In accordance with the updated code of corporate good governance, the audit committee's powers,
functions, and responsibilities shall be outlined or inline in the audit charter authorized by the BOD.
So first is assists the board, so, ano ang dapat mong iassists?
As an audit committee need mong iassist ang responsibility ng board para sa financial reporting
process, system of internal control, audit process, and the monitoring of compliance sa laws, rules and
regulation. You need to make sure that the board is processing and monitoring what should be
processed and monitored.
Second is, audit committee should provide oversight, oversight over management activities. So, what
are those? This includes managing credit, market, liquidity, operational, legal, and other risks of
corporation. Dito included din na dapat may regular receipt mula sa management tungkol sa mga
information about risk exposures amd risk management activities
Next naman, it is more than just providing oversight because in here an audit committee should perform
oversight function sa kapwa nila auditor, both internal and external making sure that they are acting
independently from each other also to make sure din na both auditors nakaka-access sila dun sa mga
records, properties, and personnel na kailangan para magawa nila ng mas maayos yung kailangan nilang
gawin.
So fourth function, is to review the annual internal audit plan. Bakit? Simple lang, para maensure yung
conformity nito or yung pagkakasundo nito sa objectives. Included dito yung audit scope, resources, and
ofc budget to implement such plan.
Next is, discuss with the external auditor. So, what and when to discuss? The nature, scope, and
expenses of the audit is what should be discussed and appropriately dapat madiscuss na to bago pa
masimulan ang audit.
Next function is to organize internal audit department. Na kung saan dapat din iconsider yung
appointment ng independent internal auditor plus the terms and conditions ng engagement pati ng
removal.
Next is to MONITOR and EVALUATE the CORPORATION’s INTERNAL CONTROL SYSTEM, so ano dapat ang
imonitor at ievaluate? Dapat mamonitor at maevaluate ang fairness at effectiveness ng control system
ng nabanggit kasama na rin yung financial reporting control at information technology security.
Lastly, karaniwan na itong ginagawa talaga ng iba’t-ibang committee, review the reports. As for audit
committee, yung ipinasa sa internal at external auditors ang kailangan nilang ireview.
THE INSTITUTE OF INTERNAL AUDITORS
1941 Establishment
> 150,000 members Professional association
HEADQUARTERS Altamonte Springs, Florida, United States
Leader in certification, education, research, and technological guidance
Global voice, recognized authority, acknowledged leader, chief advocate, and principal educator.
Establishement was on the year 1941, it is an international association wherein meron itong more than
hundered and fifty thousand members there headquarter is in Altamonte Spring, Florida, United States.
Sa buong mundo, ang institute na ito ay nirerecognized bilang internal audit profession na nangunguna
sa napakaraming bagay gaya na lamang sa certification, education, research, technological guidance.
Kilala rin ang IIA bilang boses ng internal audit profession, recognized authority, acknowledged leader,
chief advocate, and principal educator.
Another thing, yung mission ng IIA is mag provide ng dynamic leadership for the global profession of
internal auditing. So, when we say dynamic leadership, it is where the way of leadership changes, that
kind of leadership is characterized by constant change and it is keep on progressing depends on the
needs.
THE IIA’s SPECIFIC OBJECTIVES
To cultivate, promote, and disseminate knowledge and information concerning internal auditing and
subjects related thereto.
To establish and maintain high standards of integrity, honor, and character among internal auditors.
To furnish information regarding internal auditing and the practice and methods thereof to its members,
and of other persons interested therein, and to the general public.
To cause the publication of articles relating to internal auditing and practices and methods thereof.
To establish and maintain a library and reading rooms, meeting rooms, and social rooms for the use of
its members.
To promote social intercourse among its members.
To do any and all things which shall be lawful and appropriate in the furtherance of any of the purpose
herein before expressed.
PROFESSIONAL QUALIFICATIONS
To assist in achieving the goals and objectives of The Institute of Internal Auditors, the Certified Internal
Auditor (CIA) Program was established.
The Board of Directors will develop, approve, and modify as necessary, such policies and procedures as
may be required to stimulate and encourage this program.
The IIA has promoted the professionalization of internal auditing primarily through:
So si intitute of internal auditor may napromote na silang professionalization or yun ngang
professional qualification na nabanggit natin, at ito yung mga yon
> Adopting a common body knowledge listing the disciplines related to internal auditing and the
competencies that internal auditors must develop within each discipline.
> Establishing a certification program, including an examination that is a prerequisite to receipt of the
Certified Internal Auditor designation.
> Administering a continuing professional education (CPE) program.
> Publishing a technical journal, The Internal Auditor
> Establishing a Professional Practices Framework that includes the definition of internal auditing. The
IIA Code of Ethics, the Standards, Practice Advisories, and Development and Practice Aids.
Institute of Internal Auditor - PHILIPPINES
Primary association of internal auditors in the Philippines.
Dedicated to develop and promote the practice of internal auditing, it serves as the principal educator of
internal auditors and provides professional guidance on emerging issues and trends that impacts the
profession.
Committed to:
1. Serve its members in fulfilling their professional responsibilities by being the principal educator
of internal auditors and by maintaining a professional organization
2. Serve the profession of internal auditing by being the recognized authority on internal auditing
and the acknowledged leader of the profession
“IIA institute of internal auditors - Leader in certification, education, research, and technological
guidance
Global voice, recognized authority, acknowledged leader, chief advocate, and principal educator.”
CERTIFIED INTERNAL AUDIT (CIA)
The CIA designation is the only globally accepted certification for internal auditors and remains the
standard by which individuals demonstrate their competency and professionalism in the internal
auditing field. Candidates leave the program enriched with educational experience, information, and
business tools that can be applied immediately in any organization or business environment.
A Certified Internal Auditor (CIA) is a certification offered to accountants who conduct internal audits.
The Certified Internal Auditor designation is granted by the Institute of Internal Auditors (IIA) and is the
only such credential that is accepted worldwide.