Internal audit can be defined as an evaluation and analysis of business operations and performances conducted by the internal auditors of the company. Organizations and companies depend on Internal Audit to gain insights into different emerging risks. It is an integral part of the management process and assists the organization in moving ahead to achieve objectives.
Internal audits are considered as a part of the overall system of internal control established in an organisation. This process gives the management a proper idea about the control system inside the organisation and helps detect various challenges and inefficiencies, maintain accurate and timely financial reporting and data collection.
The company's internal audit includes its accounting processes, governance structure, compliance with laws and regulations. The audit can also be a tool to achieve operational efficiency by way of identifying issues and addressing them before going for external audit.
Here is an overview of the internal audit processes
There are many types of audits that are covered under the Internal Audit process. These are important for any company to function properly. The audits are as follows:
This type of Internal Audit is conducted in order to assess the performance of the company or organization in accordance with the set of objectives laid down by them. A thorough evaluation of the overall performance of the company is done with a focus on effectiveness in the achievement of objectives, operational efficiency, ethics and use of resources
The Information Technology Audit is conducted for a complete assessment of the IT system used by the company. The audit helps the organization to examine the system’s accuracy and check whether it is secure or not. IT audit includes processes like Information security, IT governance, IT controls, information processing and infrastructure.
An operational audit refers to the process of examining how an organization conducts business. It involves carefully evaluating the overall efficiency of the operative internal controls, checking the compliance of the business activities with the regulations, internal policies and industry standards. The audit also ensures the efficiency and consistency of the company procedures and processes.
Compliance Audit is the evaluation of the compliance with the applicable laws, regulations, procedures and policies, respect of contractual obligations. These regulations have a major impact on the company's financial progress and stability. Failure to abide by the industry laws and policies may result in heavy financial losses or reputational damage.
Environmental Audit examines the overall environmental impact of the operations of the company. It assesses the company's compliance with environmental laws and regulations.
Internal Audit is conducted for checking the financial health of the organization. It is one of the important functions of the business management and organized by the entities for deeply examining the efficacy of the business operations.
Since the world of business management is undergoing rapid transformation, there is a great need for continuous improvement in overall performance of the business entity and an internal audit will help address the issues in an effective manner.
