OPPORTUNITIES FOR ENHANCING INTERNAL AUDIT QUALITY THROUGH EFFECTIVE AUDIT COMMITTEE PERFORMANCE

Abstract

Understanding the role of audit committees in improving the quality of internal audit is not an aspiration for originality in science, but an attempt for a more complete and comprehensive disclosure of the specific aspects of these interactions, granting stability and sustainability to each organization. Within the meaning of the Global Standards on Internal Auditing, internal audit helps an organization achieve its goals by applying a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control and management processes. The wide range of activities of the Audit Committee also includes the internal audit function. In this regard, the purpose of this article is to analyze the possibilities of audit committees to improve the quality of internal audit. The ability of the audit committee to plead for the independence of internal audit, for compliance with the guiding principles underpinned by standards, helps to ensure the effectiveness and quality of the audit. The Audit Committee is competent to assess the effectiveness of all aspects of the internal audit's operations as a function, service, system, process, and outcome. In this regard, the methodological focus of the development is on the internal audit activities observed by the Audit Committee, such as strategic planning, annual planning, execution of audit engagements, activity reporting, and other significant matters related to internal audit operations. The focus areas also include overlapping aspects of operations, such as the risk management process, the effectiveness of internal control systems within the organization, financial reporting processes, sustainability reporting.The study argues that the effective functioning of audit committees can ensure compliance of the internal audit function with the Global Internal Audit Standards and the achievement of set objectives—namely, audit quality. It presents the key activities of the audit committee related to the internal audit function, which guarantee its ethics, competence, independence, and quality in planning, executing, and reporting engagement results—including the implementation of recommendations and action plans.