Preface

Internal auditing is a crucial function within any organization that assures management and the board of directors that the organization’s operations are functioning effectively and efficiently. As an independent and objective assurance and consulting activity, Internal auditing helps an organization achieve its objectives by examining and evaluating its governance, risk management, and control processes. The primary goal of internal auditing is to identify potential issues and areas of improvement within an organization and provide recommendations to mitigate risk and improve overall performance.

This textbook is designed to provide an overview of internal auditing. It covers the history, role, and importance of internal auditing within organizations and the skills and certifications required for a career in internal auditing. The textbook also delves into the professional standards and select techniques internal auditors use, including the International Professional Practices Framework (IPPF) set by the Institute of Internal Auditors (IIA). The IPPF serves as a framework for internal auditors to plan, execute, and report on their work consistently and professionally. Managing the internal audit function is a critical aspect of internal auditing, and this textbook covers essential topics such as organizational structure, reporting relationships, outsourcing the internal audit function, and communication with stakeholders. It also highlights the importance of continuous improvement and innovation in internal auditing. It provides an overview of the Quality Assurance and Improvement Program (QAIP) to ensure that internal audit functions meet the highest quality standards.

Governance and risk management are integral to any organization; this textbook covers these topics in depth. It explains the role of the board and senior management in risk management and the different types of internal controls that organizations can implement to manage risk effectively. The textbook covers the importance of compliance and regulation and a high-level overview of fraud and technology risk assessment. With the increasing role of technology in organizations, internal auditing has a crucial role in assuring the security and efficiency of technology infrastructure. Internal controls are a fundamental aspect of internal auditing, and this textbook covers the various types of internal controls, such as control activities and procedures, as well as best practices for adequate internal controls.

The textbook also explains the role of internal auditors in governance, risk management, and controls, including how they communicate with management and the board and provide assurance in these areas.  It also covers audit planning, including internal audit strategic planning, annual and multi-year internal audit plans, specific audit engagement planning and internal audit project and resource management. It also covers internal audit metrics and performance management, as well as the importance of continual monitoring of progress and adjusting plans. The textbook guides students in developing audit programs for many organizational and functional areas and preparing internal audit reports based on the results of the audit engagements. Finally, the text highlights interior auditing concepts related to auditing in the public and not-for-profit sectors.

Designed for students pursuing undergraduate degrees or accounting diplomas, this textbook is essential for understanding key concepts and select critical internal auditing practices. Overall, though, this textbook serves as a valuable resource for students, new internal auditors, and other professionals interested in learning more about internal auditing by providing knowledge and understanding of the various critical aspects of internal auditing.

Key Features of this OER

Structure of this OER

This OER is divided into twelve chapters.

Each chapter begins with an overview of the content to be covered and lists the objectives the student will achieve after reading the chapter. The content of each learning objective is linked to a section within the chapter. Each section begins with well-thought-out questions that serve as a precursor of what the student will encounter within the section. Within each section, the “Internal Audit in Action” feature reinforces the practical application of the internal audit function in the business world.

Each section closes with a summary of key takeaways and end-of-section questions, including multiple-choice questions, review questions, essay questions, and mini-case studies.

Real-Life Scenarios

Students can see the practical application of the internal audit function in multiple places within the OER.

“Internal Audit in Action” is a standout feature designed to bring internal auditing principles to life. Every section within each chapter of this textbook begins and ends with a vignette showcasing how the concepts discussed are applied in practice. These scenarios provide concrete examples of internal auditing in action, helping to bridge the gap between theory and practice. Whether identifying risks, evaluating controls, or communicating findings, these vignettes illustrate the complexities and challenges that auditors face in their daily work. It also enriches the learning experience by making the textbook content more relatable and accessible. Instructors will find it a powerful tool for helping students connect the dots between the classroom and the real world, making the learning process more dynamic and effective. “Internal Audit in Action” helps students gain the practical insights they need to excel in their future careers as internal auditors.

The OER also provides several experiential learning opportunities. For instance, students can figuratively accompany a new auditor through the various stages of the internal audit as they prepare their report and get ready to present their findings. Alternatively, students can adopt the role of an internal auditor to answer mini case studies that deal with real-life scenarios.

Emphasis on Readability

We used tools that increase readability and faster review of the material, including headings and sub-headings, bolded key terms within the text that are hyperlinked to definitions, end-of-section key takeaway summaries, and a glossary of terms.

Content is presented in easy-to-understand chunks using short paragraphs preceded by clear headings. Bulleted and numbered lists are used to draw attention to key information. Essential concepts are highlighted by being placed in a box.

Review and Practice

Each section of a chapter ends with a “Key Takeaways” feature crafted to reinforce learning by summarizing the most critical points from each section. At the end of every section, students will find concise bullet points that distill the essence of the content they have just studied.

This feature is designed to help students review and retain the key concepts that are most important for their understanding and future application. For instructors, “Key Takeaways” is an invaluable tool for reinforcing key lessons and ensuring students grasp the fundamental ideas before moving on to more complex topics. These summaries are perfect for quick reviews, exam preparation, and class discussions. They provide a clear and focused recap, making it easier for students to remember and apply what they’ve learned. By highlighting the most relevant points, this feature ensures that students don’t just passively read the material but actively engage with it. Instructors can use these summaries to emphasize critical learning objectives and ensure students are well-prepared for exams and real-world auditing scenarios.

The multiple-choice and true-false questions are programmed as interactivities that provide students with a self-test opportunity. They also offer students feedback in real time to confirm their understanding of the concepts presented in each section.

The review and essay questions test student understanding of the material presented in each section and encourage considered comment.

The mini-case studies encourage students to undertake a thorough assessment of the scenario presented. They are perfect for group discussions and serve to build professional communication skills. These longer case-type questions allow students to tie together ideas from the chapter and use them to solve real-life situations.

Instructor’s Manual Available

An instructor’s manual (IM) is available for this OER; it includes an answer key for the assessments included in this Pressbook. Note that requesting faculty must be vetted before Open Learning at Conestoga College can distribute this IM. The IM is copyrighted by its author and all rights are reserved; instructor’s manuals are for teaching purposes and may not be shared or republished in any form.

To obtain the IM for Internal Auditing: A Practical Approach, please send an email to Open Learning at Conestoga College.

Amit M. Mehta

August 7, 2024