The Internal Audit Function: A Prerequisite for Good Governance

In 2013, the NASDAQ Stock Market LLC (NASDAQ) establish and maintain an internal audit (IA) function. Comment letters received on the proposal were overwhelmingly negative. The top three reasons against the proposal were cost of implementation, time commitments required of organizational employees, and redundancy of IA to a firm's external audit process. This article delineates differences between internal and external audit responsibilities, identifies the benefits of internal auditing, highlights the role that internal auditors play in corporate governance and risk management, demonstrates how IA assurance and consulting activities add organizational value, and discusses cost‐effective options for implementing an IA function. © 2017 Wiley Periodicals, Inc.