Internal Audit: Rise and Development

Abstract

Rise and current performance of internal audit is discussed. Key chronological phases of audit are defined by analyzing the development of international audit in the international context. Functions of international audit in corporations and the development of technologies used by auditors are taken as the chronology criteria. The five phases in which the notion “internal audit” was undergoing gradual evolution in the global theory

© T. О. Каменська, 2015

and practice are defined. At the earliest phase, the tasks of internal audit were confined to reviews of accounting reports and the check up function, namely, checks up of storage of material assets and execution of orders issued by enterprise management. At the current phase, internal auditors contribute to improvements in the risk management processes, corporate management and control.

Results of the analysis of the existing regulatory documents pertaining to internal audit in Ukraine are shown, allowing the author to define chronological phases of its establishment. Internal audit in Ukraine first established as the system for control over operation of commercial banks, aiming at evaluation and improvement of the banks’ internal control system. Subsequently, internal audit was being introduced in the state financial control, in the corporate management of joint–stock companies and in financial institutions. Detailed review of the peculiarities of the current phase is given, with emphasis on the ones related with informal aspects of internal auditors’ work. The definition of internal audit and the key requirements to its functions and tasks, fixed in legal documents of regulatory bodies in Ukraine, are given. The conclusion is made that the regulatory framework for organization and operation of internal audit in Ukraine fully conforms international requirements and standards.