Position and role of internal audit within the business group controlling mechanisms
Position and role of internal audit within the business group controlling mechanisms

Author(s): Jiří Bálek
Subject(s): Law, Constitution, Jurisprudence, Law on Economics, Commercial Law
Published by: Societatea de Stiinte Juridice si Administrative
Keywords: internal audit; control mechanism; business; group; corporate;
Summary/Abstract: The aim of this paper is to define the position and the role of the internal audit within the controlling mechanisms of a business group as these are supplementary to supervisory functions. In some jurisdictions, internal audit forms an essential function with respect to the corporate governance. However, powers of the internal audit body or function are affected and vary due to its position in various legal structures. Within the EU (and Swiss) legislative framework, internal auditing provides independent assurance that governance and internal control processes are operating effectively. As a controlling mechanism, internal audit is in general more efficient if established under the powers of the statutory body than entrusted with the supervisory body. The supervisory powers of internal audit on the group level in the various possible legal structures set forth by the law are, however, mostly dependent on the recognition of the internal audit powers by the local group entities.

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