Purpose

Robust internal audit systems increase the reliability of financial systems and reports.

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. An internal audit department considers systems and processes within and outside the finance department. In addition to compliance with established policies and procedures, they consider wider issues such as organization reputation, opportunities for growth and risk management.

An external audit adds credibility and reliability to financial reports by giving stakeholders an independent opinion of the financial statements for a given period.

An audit may be defined as an opinion by the auditor on whether the financial statements are prepared, in all material respects, in accordance with the relevant applicable financial reporting framework. Ideally, an audit should be conducted in line with International Standards on Auditing to enable the auditor to give their audit opinion. An unmodified audit opinion is often referred to as an unqualified opinion or clean opinion. This is where the audit report states that the financial statements present fairly in all material respects or give a true and fair view. A qualified opinion in the audit report is given when the auditor believes there is a material misstatement or is unable to obtain sufficient evidence on a particular matter or matters in a specific area.

UNDP’s approach

UNDP assists health programmes to improve audit and assurance processes by:

• developing internal audit tools and terms of reference and strengthening audit committees to improve the transparency of audit and assurance systems
• developing and implementing terms of reference for both external and internal audit work within health systems

EXPAND

• drawing on global experience, tailored to the country context, to provide advice and good practices on internal audit processes (e.g. an internal audit person or department should report direct to a senior government official or chief executive officer of a civil society organization, to be sufficiently independent of the health system)
• working with management to establish a plan to address the weaknesses and support successful implementation of audit recommendations.