Internal audits are an integral process in any organization. The process keeps several internal controls in check by reporting the functioning, progress and shortcomings of various departments. The core definition of an internal audit says that it is an independent, objective assurance as well as consulting activity that is designed to add value and enhance the organization’s operations. An audit consultancy aids an organization to accomplish its goals by bringing forward a systematic and disciplined approach. This gauges and evaluates the effectiveness of risk management, governance processes and controls. These aspects are not always readily apparent to those undergoing an audit, it has become an integral component of proactive, forward-thinking organizations.
Benefits of an Internal Audit
Now that we know what an internal audit is, we should also be aware that it is not a one-size-fits-all activity. These audits are recurring through the year, unlike statutory audits that take place only at the end of the year. While external auditors report to people outside of the company’s governing body like shareholders or stakeholders, an internal audit is a key to recognizing pros and cons internally. Such a continuous valuation process presents the following advantages to the company’s growth and progress.
Offers Objectivity Insight
This is one of the major advantages of the process. An enhanced oversight is recognized as a valuable source of information. It can be implemented through the formalization of reporting wherein every department works simultaneously to present their outcomes in a put together format. The vision or objective can also be shed light on in a clearer manner through workflow approvals. Having a thorough objective in perspective helps get the tasks done in a methodical way.
Cogent Internal Controls
Analysing your enterprise’s control environment is the internal auditor’s number-one task. These audits evaluate your internal controls. Audit consultancies perform tasks that comprise checking of actions, systems, and processes, including monitoring, to ensure that they are well designed and implemented and that they are working as they should be. Irrespective of who serves in which role. According to the COSO framework of Internal Control-Integrated Framework, “internal control” is defined as a process, effected by an entity’s board of directors, management, and other personnel. They are curated to provide rational assurance surrounding the achievement of objectives relating to operations, reporting, and compliance.
Cyber Surveillance
In recent times, wherein almost all business activities have taken a virtual or digital route, internal audits present a way to scrutinize your cybersecurity environment. They can keep an account of all your digital devices, for instance, and examine whether they are secured and align with your policies. These actions are also beneficial when looking for vulnerabilities in your digital systems and networks. Internal audits can provide useful insights on how to close the gaps or loopholes between the systems.
Efficacy
Audit consultancies conduct audits that are able to spot redundancies. An increase in efficiency is guaranteed by checking your business processes, workflows, and governance processes. Upon the compilation of the audit, a report is generated with the recommendation from the team on how to streamline or automate a few processes, save on time and money in certain areas, and make the overall operations smoother.
Integrity
An internal audit keeps the integrity of your company in check, it does not get any simpler than that. People aren’t always honest and to err is human. When regular audits are conducted they help analyze and scrutinize your financial statements and verify their accuracy and integrity. These practices when placed and performed correctly makes the organization process-dependent instead of person-dependant.
Enhanced Compliance
Audit consultancy performs internal audits that check the laws, industry standards, and regulations according to which your company needs to comply and identifies whether you are, in fact, compliant. In case you happen to miss the mark in some arena, auditors recommend how to remedy the problem.
Finally, Diminishes the Risk
Risk assessment and management is another important indicator that is kept high on priority lists when conducting an internal audit. The team considers all the identified risks to your enterprise and checks whether your risk mitigations are working as they should. They recognize if there are any hollow strategies and suggest solid remedies to resolve any pertaining issues.
