What is the purpose of an internal audit?
Internal auditing is a non-biased, aim assurance and consulting activity that adds value and improves the operations of a company. It is a conversational and proactive method of reviewing a company’s operations and internal controls and making recommendations for changes. Internal audit’s role is to provide independent assurance that a company’s risk management, governance, and internal control mechanisms are in good working order. Internal audits are classified as information system audits, compliance audits, environmental audits, controls audits, operational audits, performance audits, and specialty audits, based on the function being audited. Visionary, excellent communicator, teamwork, relationship builder, and diversity are all attributes of a good internal auditor.
An external audit is a type of audit in which we inspect the financial records and statements in order to establish a perspective on the company’s financial performance. Internal auditing is being strengthened. The following are a few of the best strategies to strengthen your internal audit.
Auditors must be familiar with the client's business and sector
This causes the capacity to swiftly construct a picture of the client’s company, organization, and essential qualities. To focus on the audit method, a qualified auditor can sort out relationships and linkages inside the company. Whatever form of internal audit your organization does, having the proper internal audit structure in place is critical. A solid internal audit framework will ensure that it improves your business procedures and that you are prepared for industry competitiveness. The following are some of the internal audit best practices that can help you create the best internal audit structure:
Create a brand identity and launch it
Simply put, your brand is what you are known for. When people in your company hear the words “internal audit,” what do they think of? Do they envision a team of advisors who are creative and bring value? Or is it something else entirely? Change your brand to influence their thinking.
Connect advisory and assurance activities
If you want to expand your consulting services, start with senior management’s objectives and plans for achieving them. However, this can intimidate you, especially if you’re new to advising services or feel bogged down in assurance activities. Although understanding management’s aims and strategy is always a good place to start, there are alternative methods to consulting services.
Offer cyber-security services
As you’ve probably heard, it’s not a question of if, but when, your company will be hit by a cyberattack. As a result, cyber threats are at the top of the agendas of both the board of directors and the audit committee. They’ll most likely stay put.
Examine the risk management process from beginning to end. Internal audit, as the third line of defense in risk management, is critical in assuring the effectiveness of risk management operations carried out by the first and second lines of defense. Risk management that is fragmented and segregated incurs expenses, gaps, and redundancies, and exposes enterprises to unanticipated risks.
Examine the process of strategic planning
Internal audit will prompt the audit committee in many firms to guarantee that the board is engaged in strategic planning. It’s a major governance and oversight concern, especially for the data management uses, the model’s planners use, and the assumptions management makes.
Adopt the use of analytics
Internal audits may take advantage of analytics capabilities across the corporation to help practically every department. Through more targeted, effective, and efficient audits, analytics immediately contribute to cost reductions. It also allows for more time to be spent on advisory tasks.
We should bring internal audit reports up to date
Because of outmoded reporting methods, much of internal audit labor goes unnoticed. The correct reporting upgrades will draw attention to that work and provide stakeholders with tangible evidence of internal audit transformation.
Improve your abilities and skills
Internal audit’s poor impact and influence are frequently attributed to talent shortages or shortfalls. Internal audit abilities must grow in order for the function to remain relevant as organizations’ needs change.
Increase your own effect
As an internal audit leader, your personal impact will set the tone and influence stakeholders’ impressions of the function. And having technical talents isn’t the only way to have an impact and influence. Strong communication, teamwork, leadership, and other interpersonal skills are also important.
Internal audit failure is less likely when these best practices for internal audit are implemented. Despite these best practices, the internal auditing team has many hurdles that must be solved in order to achieve improved results.
How can we help?
Alya Auditors provide internal audit services to a variety of industry sector clients, ranging from corporate setups to multinational enterprises, in order to improve the consistency, efficiency, and effectiveness of their business operations. We provide an unbiased judgment on your operations through our internal auditing services, develop a plan to remove or decrease risks, and so generate operational excellence for you. We keep you compliant with all statutory requirements, protect your assets from a variety of threats, and ensure that your business operations are effective and in compliance with all applicable laws and regulations. Contact us today!