Internal Audit
Candlefocus EditorThe primary purpose of an internal audit is to identify areas where processes, systems and controls can be improved, to determine whether the organization is operating effectively and efficiently, determine the accuracy and reliability of data, and to assess the adequacy of risk management and governance processes. By examining and evaluating processes, internal auditors are able to verify whether procedures are followed and whether controls are effective in mitigating risk. Internal auditing also evaluates whether policies and procedures are consumed with laws and regulations, whether the quality and quantity of management information and reports comply with organizational requirements and whether the data is accurate and reliable.
The internal audit process starts by setting audit objectives and developing the audit plan. In developing the audit plan, the internal auditors develop the specific audit objectives, determine the audit criteria, agree on the timing of the audit, identify the audit procedures, and define the reporting format. During the audit, the internal auditor collects evidence, evaluates the findings, documents results and communicates the information to management. Finally, management evaluates the effectiveness of the internal control systems, formulates and implements corrective actions, and reviews the internal audit report.
In summary, internal auditing is a critical management tool used to assess operational and performance risks, design controls to mitigate the risks, and enhance overall organizational effectiveness. The internal audit process contributes to improved processes, increased efficiency, more effective risk management and improved controls, and subsequently helps to ensure compliance with laws, regulations and policies. Through this process, internal auditors offer an objective and independent service to organizations that investigates and evaluates internal control systems and provides management with timely and reliable feedback.