“An investigation into the financial and operational costs and benefits of the internal audit / internal review activities within an organization.”
The Topic and its Significance:
The Topic focuses solely on internal audit, which involves examination, monitoring and analysis of activities that are related to a company’s operation, including its business structure, employee behavior and information systems. An internal audit is intended to review what a company is doing in order to identify potential threats to the organization’s health and profitability, and to make suggestions for mitigating the risk associated with those threats in order to minimize costs. Regulations, such as the Sarbanes-Oxley Act of 2002, have increased corporate requirements for performing internal audits, which can be of various types such as Operational audit, system audit and compliance audit.
Internal Audit is relevant to ACCA papers F2, F8, P3 andP7. In this RAP you will be identifying the different benefits and cost associated with Internal Audit. For this purpose you need to choose a company which has undertaken internal audit and then analyze the advantages it has gained through this activity and also identify the financial and operational cost it has incurred with respect to internal audit. The major advantage of internal audit is that it provides management with a methodology to identify those risks that may prevent the organization from meeting its objectives. For example, if a company has a strategic objective to raise $20 million in loans to build a new facility there are a number of risks that may prevent that from occurring. One of the risks may be the external factor of increased interest rates. The financial costs will vary based upon the size and goal of the internal audit function. Additionally, the cost will be based upon the resources used to perform the work (outsource, co-source, in-house).
For this topic you will be using the knowledge gained in the above mentioned ACCA papers and also knowledge provided by THE MENTORS NETWORK. You will be required to do cost benefit analysis by identifying and evaluating the benefits and cost associated with the internal audit.
Should I choose this Topic?
Decision of selection will be based on three things:
1. Topic itself
3. Availability of Information
This topic will be suitable if you have access to the company, its operations and its personnel and this will only be possible if you are an employee of the company or you have contacts in the company for example if the company is owned by you or one of your relatives who will allow you free access to company’s information.
The company you chose for this particular topic should be having internal audit so that you are able to identify the advantages it has gained through this activity. Also the costs that have been incurred with respect to this activity.
The information needed for this topic is purely internal as it is very specific to the organization. Information will only be available for this topic if you have authority to access internal information of the company and there are no confidentiality issues for the use of required information for your RAP. You need to have cost details both financial and operational that the company has incurred for functioning of internal audit.
The topic can be summarized as:
“Choose if you are confident about your knowledge on internal audit and you can get enough information through both primary and secondary research.”