Does the eternal question of whether to or not to go for an internal audit bother you as well?? Or the question of its necessity for smaller organizations with limited resources?
The answer will be a vibrant “YES” if you take into account your client’s dependability on you in terms of efficiency, compliance, and service security. Internal audits have been a trusted tool to avert risks for a long time now. The self-checks ensure that we do not stray from our set objectives and to keep an eye on gaps in our approach and technique or to look for scope for enhancement, to ensure no violation of our objectives, these are some the vital aspects that internal audit clarifies for you.
What’s an internal audit?
Institute of internal auditors says, “it provides independent assurance of the organization’s governance, management, internal control processes, and their smooth, effective operations.” The objectives of internal audit firm are to perform an equitable study of your business and therefore help you better and mature your firm’s business model and practice.
An insight into the firm’s procedures, culture, policies, boards, and administration surveillance by substantiating your internal checks and balances, such as risk aversion preparedness, the efficacy of operations and legal compliance can all be achieved with the help of Internal Audits.
Securing all your business assets and preparedness against any threat are the objectives of an internal audit. These also give an insight into your compliance, with your said business policy, as mentioned in your documents. Here is a list of 5 reasons why you should consider internal audits:
Equitable Insight: If you initiate a review of your own work, you will find yourself burdened with conflict of interests. Your internal audit team, therefore, shouldn’t have any administrative or operational influence for the audit to be impartial and equitable. The lack of resources, however, could be a major hindrance, it, therefore, works really well to cross train your employees and enable them for interdepartmental audits. The independence and unbiased nature of the audit adds a substance to your organization.
Boosted efficiency: An insight into a deviation from your firm’s literature and documents shows up in the audits and therefore guides you towards course-correction; they also help you steer your firm towards a better strategy if need be to minimize and future risks. These also guide you towards places where checks and balances need to be put in place, helping your firm to be a process dependent organization and not a people dependent organization.
Risk Mitigation and Taking care of Assets: Systematic risk mitigation not only helps you avert the risks but also alerts you and other stakeholders in advance to proceed towards a timely remedy. Changes can be tracked and documented to ensure risk mitigation.
Control Assessment: Internal audit introduces a sense of accountability and responsibility in your employees and a fear that management is looking into their work regularly.
Legal compliance and regulations: To avert any future ramifications in terms of legal costs and penalties, your firm must ensure complete compliance; internal audit helps the firm achieve that. This also provides peace of mind and bestows confidence for upcoming external audit. Not only this, but it also promotes the client’s confidence in the firm and helps avoid legal complications of non-compliance, therefore, making it worth all your time and resources.
We hope through this article to encourage more people towards internal audits as that’s the right, ethical approach to the better future of business. A healthy business definitely makes a healthy business owner! Good Luck!