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The Art Of Expressing An Internal Audit Opinion

Dan Swanson | September 6, 2006

Executive management, audit committees, and the board want to know whether their internal control systems work. The chief audit executive is often requested to issue an opinion on the adequacy of internal controls within the organization to meet this assurance need. If a CAE does issue a formal opinion, it’s crucial that all parties clearly understand the areas and issues the CAE is addressing in doing so. Otherwise, brace yourself for expectation gaps.

Expressing opinions is no easy task. The CAE must consider the scope of the audit effort and the nature and extent of auditing performed, and evaluate what the evidence from the audit(s) says about the adequacy of internal controls. A formal audit opinion should clearly express four points:

  1. The evaluation criteria and structure used;
  2. The scope over which the opinion applies;
  3. Who has responsibility to establish and maintain the system of internal control; and...
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