ERM Glossary: Audit Function

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The (internal) audit function of a firm is the part of the firm that is charged with carrying out reviews aiming at helping the firm achieve its stated objectives. It does this by using a systematic methodology for analysing business processes, procedures and activities with the aim of highlighting organisational weaknesses and recommending solutions.

The scope of internal auditing within an organization is often broad. It may involve topics such as the efficacy of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets, and compliance with laws and regulations. Within a financial firm, compliance with laws and regulations is typically important enough to require the establishment of a specific compliance function.

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