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O THER AR TICLES Addressing Internal Audit Reports A Balanced Approach  Muhammad Imran, ACA Debacles an internal audit function faces in volatile environment, probable reactions from audit committee in response to audit report. How a veteran Non-Executive member of the Audit Committee can augment Internal Audit function and ensure its continuity and usefulness Board of Directors is accountable for overall performance In comparatively structured business setups which are of the company. Code of Corporate Governance requires following guidelines of Code of Corporate Governance delegation of core business functions to different by putting non-executive directors. Internal audit committees. Audit committee is entrusted to govern department is supposed to follow audit plan and prepare internal audit function of the company and establish audit reports on different business functions which internal controls for smooth functioning of business are submitted to audit committee for their review and operations and making them free from surprises. In actions. This the time when internal auditor and process SME’s or family owned unlisted enterprises, normally a owners have to face different reactions from audit single active member is performing multiple functions committee, for empirical analysis these reactions can be like acting as Chairman, Chief Executive and sole active categorized into two broad groups which are actually member of the audit committee because of the absence two extreme ends. It doesn’t mean that all the reactions of non-executive director in audit committee, all reports of the audit committees can be absolutely positioned are addressed to him/her, consequently auditor has on said extreme poles but study shows that most of the to report snags and glitches in functions and business companies pass through these phases in their life cycle processes to the gentleman who is actually the process before attaining maturity. owner of those functions/ processes. First of all auditors are reluctant to report such anomalies which place them In first type of response audit committee is acting as in head-on position with the CEO, secondly if auditor tries report collection and archiving Centre i.e. no active to do so, the bashing response from executive impede participation in the internal audit function, possible him to make second attempt. In such environment, reasons are committee lack capacity to interfere or the internal audit function remains volatile till composition other possibility is committee is concern about business of the audit committee is reformed. operations but committee members feel that auditor The Pakistan Accountant | Apr-Jun 2014 27