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By the end of this session, you should be able to:

  1. explain the concept of Internal Audit
  2. describe the scope and objectives of the Internal Audit Agency
  3. state the functions of the Internal Audit Agency
  4. state the composition of the Internal Audit Board
  5. outline the functions of the Internal Audit Board
  6. describe the tenure of office and the meeting procedures of the Board

Now read on…

3.1 Internal Audit and internal Agency Act 2003

Most Public Sector organizations are large in size and very complex in structure. This has made it relevant for these public sector organizations to have Internal Audit Department to ensure that Internal Controls instituted by the management of these organizations are enhanced.

Internal Audit is an appraisal or monitoring activity established by directors, councils or board to the review of the accounting and internal control system as a service to the entity.

It functions by, amongst other things, examining, evaluating and reporting to management on the adequacy and effectiveness of components of the accounting and internal control system.

The Audit Service usually considers the activities of Internal Audit and their effect if any on their audit procedures.

3.1.1 Scope and Objectives of Internal Auditing

In the year 2003, the Internal Audit Agency Act, 2003 (Act 658) was passed to establish central agency to co-ordinate, facilitate, monitor and supervise internal audit activities within Ministries, Departments and Agencies and the various local government organization in order to secure quality assurance of internal audit within these institutions of state; to provide for the Board of the Internal Audit Agency and to provide for connected purpose.

3.2  Functions of the Agency (Section 3)

  • The Agency shall set standards and procedures for the conduct of internal audit activities in the MDAs and MMDAs.
  • The Agency shall ensure that;
    1. Financial, managerial and operating information reported internally and externally is accurate, reliable and timely.
    2. The financial activities of MDAs and MMDAs are in compliance with laws, policies, plans, standards and procedures.
    3. National resources are adequately safeguarded.
    4. National resources are used economically, effectively and efficiently.
    5. Plans, goals and objectives of MDAs and MMDAs are achieved.
    6. Risks are adequately managed in the MDAs and MMDAs.
  • Without limiting subsections (1) and (2), the Agency shall;
    1. Promote economy, efficiency and effectiveness in the administration of government programmes and operations.
    2. Prepare plans to be approved by the Board for the development and maintenance of an efficient internal audit for the MDAs and MMDAs.
    3. Facilitate the prevention and detection of fraud.
    4. Provide a means for keeping the MDAs and MMDAs fully and currently informed about problems and deficiencies related to the administration of their programmes and operations and the necessity for appropriate corrective actions.
  • The agency shall monitor, undertake inspections and evaluate the internal auditing of the MDAs and MMDAs.


3.3 Governing Body of the Agency (Section 4)

The Agency shall have a governing Board known as the Internal Audit Board.

3.3.1 Membership of the Board (section 5)

1) The Board shall consist of the following members appointed by the President acting in consultation with the Council of State: a) Chairperson

  1. The Minister responsible for Finance or a representative of the Minister
  2. The Minister for Local Government and Rural Development or a representative of the Minister
  3. The chairperson of the Public Service Commission or a representative of the chairperson
  4. The Director-General of the Agency appointed under section 12 of this Act
  5. Two other members appointed from the private sector
  6. g) Two professional accountants each with not less than ten-year experience in the profession nominated by the Council of the Institute of Chartered Accountants (Ghana).

2) The President shall in appointing members of the Board have regard to the integrity, knowledge, expertise and experience of the persons and in particular their knowledge in matters relevant to the functions of the Agency.

3.4     Functions of the Board (Section 6)

The Board shall formulate policies for the Agency and shall;

  1. Established appropriate structures for the effective and efficient execution of the object of the Agency.
  2. Secure the achievement of the object of the Agency.
  3. Approve plans for the development and maintenance of an efficient internal audit for bodies and institutions to which this Act applies.
  4. Take reasonable and timely action on the reports submitted to it by the DirectorGeneral.

3.5 Tenure of Office of Members of the Board (Section 7)

Members of the Board other than ex-officio members shall hold office for a period of four years and are on the expiration of that period eligible for re-appointment except that a member shall not be appointed for more than two terms in succession.

3.6 Meetings of the Board (Section 9)

  • The Board shall meet at such times and places as the chairperson may determine but shall meet at least every three months.
  • The chairperson may at any times, and shall, on the written request of the Director-General or four other members of the Board call a special meeting of the Board.
  • At each meeting of the Board, the chairman shall preside and in the absence of the chairperson, a member of the Board elected by the member present from among their number shall preside.
  • Then quorum for a meeting of the Board shall be three members including the Director-General or the person acting as Director-General.
  • A decision at a meeting of the Board shall be that of the majority of the members present and voting and where there is equality of votes, the chairperson or the person presiding shall have a second vote.
  • The Board may co-opt a person to act as an adviser at its meetings but a cooperated person is not entitled to vote at a meeting on a matter for decision by the Board.
  • The validity of any proceedings of the Board shall not be affected by a vacancy in its membership or by a defect in the appointment or qualification of any of its members.

8) Subject to this section, the Board shall regulate its own procedures.

3.7 Disclosure of interest (Section 10)

  • A member of the Board who is directly or indirectly interested in a manner being considered or dealt with by the Board shall disclose the nature of the interest at a meeting of the Board and shall not take part in any deliberation or decision of the Board with respect to the matter.
  • A meeting who fails to disclose an interest under subsection (1) is liable to be

removed from the Board.

3.8 Committee of the Board (section 11)

The Board may for the discharge of its functions appoint committees comprising members or non-members or both and may assign to a committee such functions of the Board as the Board may determine except that a committee composed exclusively of non-members may only advise the Board.

 Self-Assessment Questions

Exercise 6.3

  1. What is Internal Audit?
  2. Explain the scope and objectives of Internal Auditing.
  3. State the three functions of the Internal Audit Agency.
  4. Outline the members that make up the Board.
  5. State three qualities that the President will look up for in a person to be appointed as a member of the Board.
  6. State four functions of the Board.
  7. Explain the tenure of office of members of the Board.

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Eric Adjei

Eric Adjei

A professional with six (8) years’ experience in finance and accounting. Demonstrating expertise in accounting procedures, computerized accounting system management and financial operations. Financially astute with excellent analytical, problem solving, management, people supervision, organizational, business administration, operation and commercial management and teaching skills.

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