People often ask, is internal audit necessary? What if we’re a smaller organization, should we be spending our already limited resources on an internal audit program? If your clients depend on you to provide efficient, compliant, and secure services, then the answer is a resounding “yes”. Internal audit is an important function of any information security and compliance program and is a valuable tool for effectively and appropriately managing risk. Are we ensuring we are doing what we say we’re doing? Are there gaps in our policies and procedures? Areas for improvement? Are we meeting our compliance goals? These important questions are addressed through internal audit.
What is Internal Audit?
According to the Institute of Internal Auditors, “the role of internal audit is to provide independent assurance that an organization’s risk management, governance, and internal control processes are operating effectively.” Internal audit is conducted objectively and designed to improve and mature an organization’s business practices.
Internal auditing provides insight into an organization’s culture, policies, procedures, and aids board and management oversight by verifying internal controls such as operating effectiveness, risk mitigation controls, and compliance with any relevant laws or regulations.
5 Reasons Why Internal Audit is Important
Internal audit programs are critical for monitoring and assuring that all of your business assets have been properly secured and safeguarded from threats. It is also important for verifying that your business processes reflect your documented policies and procedures. Here are 5 reasons that Internal Audit is important:
1. Provides Objective Insight
You can’t audit your own work without having a definite conflict of interest. Your internal auditor, or internal audit team, cannot have any operational responsibility to achieve this objective insight. In situations where smaller companies don’t have extra resources to devote to this, it’s acceptable to cross-train employees in different departments to be able to audit another department. By providing an independent and unbiased view, the internal audit function adds value to your organization.
2. Improves Efficiency of Operations
By objectively reviewing your organization’s policies and procedures, you can receive assurance that you are doing what your policies and procedures say you are doing, and that these processes are adequate in mitigating your unique risks. By continuously monitoring and reviewing your processes, you can identify control recommendations to improve the efficiency and effectiveness of these processes. In turn, allowing your organization to be dependent on process, rather than people.
3. Evaluates Risks and Protects Assets
An internal audit program assists management and stakeholders by identifying and prioritizing risks through a systematic risk assessment. A risk assessment can help to identify any gaps in the environment and allow for a remediation plan to take place. Your internal audit program will help you to track and document any changes that have been made to your environment and ensure the mitigation of any found risks.
4. Assesses Controls
Internal audit is beneficial because it improves the control environment of the organization by assessing efficiency and operating effectiveness. Are your controls fulfilling their purpose? Are they adequate in mitigating risk?
5. Ensure Compliance with Laws and Regulations
By regularly performing an internal audit, you can ensure compliance with any and all relevant laws and regulations. It can also help provide you with peace of mind that you are prepared for you next external audit. Gaining client trust and avoiding costly fines associated with non-compliance makes internal audit an important and worthwhile activity for your organization.
Still have questions about developing your own internal audit program? Contact us today and let’s start building your internal audit program.
