Explain the role of an Internal Audit in the internal control mechanism of a company.

Internal Audit is a vital constituent of internal control mechanism. It is important to constitute and maintain an audit committee that shall provide assistance to the board of directors in fulfilling their oversight responsibility to the shareholders relating to: a) The integrity of the financial statements and the financial reporting process and principles; b) Internal controls; c) The qualifications, independence, remuneration, and performance of the independent auditors; d) Staffing, focus, scope, performance, and effectiveness of the internal audit function; e) Risk management; and f) Compliance with legal, regulatory, and corporate governance requirements. The board defines clearly the roles and responsibilities of the audit committee. Management however, has primary responsibility for financial statements and reporting process, internal controls, legal and regulatory compliance and risk management. The internal auditor should examine and contribute to the ongoing effectiveness of the internal control system through evaluation and recommendations. However, the internal auditor is not vested with management's primary responsibility for designing, implementing, maintaining and documenting internal control. Internal audit functions add value to an organization's internal control system by bringing a systematic, disciplined approach to the evaluation of risk and by making recommendations to strengthen the effectiveness of risk management efforts. The internal auditor should focus towards improving the internal control structure and promoting better corporate governance. The role of the internal auditor encompasses: Evaluation of the efficiency and effectiveness of controls; Recommending new controls where needed or discontinuing unnecessary controls; Using control frameworks; Developing Control self-assessment.