Internal Audits can assist the management of a company or organization with identifying inefficiencies, craft strategies for improving business performance, and recommend areas for risk management. IA gives a comprehensive knowledge of the effectiveness of overall business operations and act as a decision making tool for business or organizational management.
Internal Audits provide unbiased, independent reviews of the systems in place, considers analysis of all aspects of the organization, both financial and non-financial. The main role of internal auditors is to provide an organization with an accurate source of information regarding the following:
There are various types of audits conducted in a business or organizational environment. They are:
This type of audit addresses issues related to accounting, recording, and reporting of financial transactions, as well as reviewing the capability of internal controls. It develops programs to assess, evaluate, and make recommendations to management concerning accounting and financial reporting of transactions.
Compliance Audit involves assessing, evaluating, and making recommendations to management regarding the effectiveness of the compliance program. This will determine if departments adhere to federal, state, and other rules, regulations, policies, and procedures.
The efficiency and effectiveness of a specific department in an organization or business is evaluated in the operational audit. This kind of audit evaluate whether the resources are utilized in the most efficient and effective way to fulfil the department's mission and objectives. An operational audit includes evaluation of organizational structure, the accuracy of data, processes and procedures, management and security of staffing, assets and productivity.
The impact of the company operations on the environment is carefully examined by environmental audits. Here, the company’s compliance with various environmental laws and regulations are assessed.
The information systems audit or IT audit addresses the internal control mechanism of information processing systems and the usage of the systems. It makes recommendations regarding the effectiveness of internal controls in the information systems, and that of the associated risk management. This type of audit examines the extent to which automated information processing systems, technology, and processes makes reliable and accurate information. Also it also checks whether all these processes are in consonance with organization’s policies, procedures, laws and regulations.
Integrated Audits combine a financial audit with an information technology assessment of the systems and infrastructure that support the unit. This kind of audit can examine the effectiveness of the cooperation between the information systems and the business activities. Integrated Audit will help an organization achieve its goals and objectives.
All the above mentioned audits are essential part of an organization. Some audits are required by regulation or policy, while others are created by management to help improve performance and identify internal control weaknesses. Audits are much more than just assessing financial stability. It essentially examines any aspect of an organization that can hamper the overall progress.
