Internal Audit function is an important process for any organization that helps in ensuring the regulatory compliance and the security of the information and data of the company. It also adds value to the organization’s performance and operations to manage risks. It can prove as a very important tool for all types of entities and businesses. The Internal Audit assists the company in improving certain defined areas and providing with information that it needs or wants to accomplish its objectives and goals. Here are certain facts and main points that organizations are unclear about the working of the internal audit function.
Responsibility of the Internal Auditor:
When the internal audits are arranged on a routine basis in the company it helps in ensuring the ability of the organization in surviving the competitive environment of the business world. It also helps in promoting the continuous prosperity of the organization. The company carries on the appointment of internal auditors under the Companies Act. The auditor is responsible for doing the following-
- Evaluating, monitoring, analyzing and assessing the possible risks and internal controls of the entity.
- Reviewing the compliance of the company with the central and state-regulated laws and policies.
- To make reassurances about the processes and procedures used in the company.
- To make recommendations to the owner or board of directors or the governing department of the organization.
Difference between Internal Audit and the External Audit:
The internal and external audits both differ from each other in regards to procedures and objectives. The internal audit is not a regulated process and can be flexibly applied in the organization whereas the external are regulated statutorily and have to have complied with uttermost responsibility.
Internal Audit Process:
When an internal auditor conducts an audit in the organization, they start the auditing process by analyzing the documents regarding the risks of the company, its performance, and set objectives. They also closely observe the implementation of the strategies in the entity. In such scenario auditors who are experts in their field must be outsourced to conduct the audit function in the company.
During the internal audit process the skilled auditors observe the risks and internal controls of the company in a detailed manner and provide their proper and knowledgeable guidance to the board of the company.
Period for Internal Audit:
The work of the internal auditor conducting the Internal Audit in the company can take up to a few weeks to complete and conclude the audit. The period depends on the size of the company or department under audit and the scope of the audit. Before the auditors conclude the whole process, they consult the directors or the board that has appointed them and discuss all their recommendations and suggestions for making improvements in the company.
Also Read: How the Process of Internal Audit works?
Purpose of the Internal Audit:
The main purpose behind conducting an internal audit in a company either big or small is to keep periodical checks and evaluations of the operations in the organization and all the employees to keep them at the top of their operative function. It helps in improvement in the processes and procedures involved in the company.