Research on the Role of Internal Audit in International Corporate Governance

Abstract

The purpose of this article is to reveal the actual role and functionality of internal audit in the modern life of a company. An increasing number of Russian companies organize internal audits not as a formal event, but as a maximally independent structure that allows increasing the efficiency of existing business processes, identifying, preventing or reducing to an acceptable level the likely inherent risks related to activities of any company. The internal audit function plays an important role in the company, exercising control in the fi nancial sector and in all other issues that management deals with, providing independent advice, protecting corporate assets, ensuring the reliability of reports and increasing the efficiency and transparency of business processes. There is a correlation between internal audit and the company’s stable development, which leads to an increase in the company’s value and the eff ective achievement of its goals. The relevance of internal audit reports also lays behind the adaptation of its function to changing expectations and its compliance with the fraud prevention policy, risk assessment of business processes, improvement of internal control strategies, as well as confirmation of the assurance of accounting (financial) reporting and compliance of the company’s policy with its goals. The article shows the analysis of the functions and the role of internal audit in the company established in the corporate codes of the UK and the Russian Federation. The main provisions of corporate codes are analyzed in detail, their recommendatory and mandatory provisions, their advantages and disadvantages are analyzed separately. Most corporate codes are a set of general recommendations for building an internal audit in a company, thus providing a room for maneuver for the company’s management based on the prevailing business environment. Comprehensive recommendations for updating the provisions were provided based on the analysis. They can give a more accurate understanding of the internal audit function, as well as its place and role in the effective achievement of the goals set in the company.