Internal Audit Subordination Principles for Lithuanian Companies

Abstract

Independence of internal audit is influenced by functional subordination level which relates to the assurance activities of internal audit. Proper level of functional subordination influences independence and objectivity of internal audit. This article analyzes theoretical principles of functional subordination, which determines that internal audit must be subordinated to audit committee or independent board. However from the ownership structure perspective, which is analyzed in Lithuanian companies, internal audit functionally might be subordinated to the other management bodies, without hindering its independence.