The Institute of Chartered Accountants of India plans to frame a separate set of standards for internal audits. At present, internal audits are not governed by any statute.
Internal audits are different from statutory audits as their findings are generally not revealed to the public and are reported only to the employer.
"ICAI will first come up with certain guidance notes and, subsequently, formulate standards based on these notes. The entire process will take around 3-4 months," ICAI President Sunil Goyal told Business Standard. Goyal said a 10-member internal audit committee, comprising six council members, had been set up for the purpose.
The standards would impose internal checks and balances on the organisation, said CS Nanda, head of the audit committee of ICAI. The new standards will differ from the existing ones by being more focused.
Nanda, however, admitted that formulating internal audit norms for each and every industry would be very difficult, given the specialised nature of an internal audit, which is unique to each industry.
He said there would be an attempt to structure a broad framework to ensure that there were no leakages and quality services were provided. "Plugging the leaks are important since the information collected through internal audits is not revealed to the public," Nanda said.
Goyal said many firms commissioned internal audits and these were unregulated. These audits deal with specialised value-added services like management, operational and performance audits and corporate governance processes of organisations. They look into the internal working of the organisation and are not necessarily financial in nature.
The ICAI president said the procedures for conducting internal audits needed systemisation and codification. Standards set by the institute helped in achieving the same, he added.
Audit guidelines
- The findings of internal audits are generally not revealed to the public.
- They deal with specialised value-added services like management, operational and performance audits.
- Internal audits are unique to each industry.
