Need for internal audit

In this lesson

1. 0:01 The need for internal audit
2. 0:39 Monitoring controls and liaising with external auditors
3. 1:17 When internal audit is required and best practice
4. 2:21 Benefits of internal audit for governance
5. 3:50 Limitations of internal audit function
6. 5:02 Outsourcing internal audit: advantages and disadvantages

About this lesson

You'll discover how internal audit provides independent assurance on governance and internal controls, supports the board's accountability, and liaises with external auditors—and you'll explore the key factors that influence whether a company needs one, including size, complexity, and risk appetite. The lesson covers the core responsibilities of internal audit: monitoring and reporting on the effectiveness of controls, ensuring policies and procedures are actually being followed, and acting as an independent bridge between the organisation and external auditors. You'll also understand the UK Corporate Governance Code requirement for large companies to annually assess whether an internal audit function is needed, even if they choose not to have one. You'll examine the real limitations of internal audit too. When staff are employees of the company, independence and objectivity can be harder to maintain. Resource constraints and gaps in professional qualifications may affect the quality of work. This is why many organisations choose to outsource internal audit to specialist external firms, which brings advantages like genuine independence and specialist expertise—but trade-offs like higher costs and potential confidentiality concerns. By the end, you'll be able to evaluate whether an internal audit function is right for a given organisation and understand the pros and cons of keeping it in-house versus outsourcing. This is essential knowledge for the Audit and Assurance paper and for understanding corporate governance in practice.

Duration: 7m