Internal Audits evaluate a company’s internal controls, including its corporate governance and accounting processes. It is an independent objective assurance and consulting activity designed to add value and improve operations of an organization. The scope of internal auditing within an organization is broad and may involve topics such as an organization's governance, risk management and management controls over: efficiency/effectiveness of operations (including safeguarding of assets), the reliability of financial and management reporting, and compliance with laws and regulations.
What is Internal Audit?
Internal audit is a systematic activity which helps an organization achieve its objectives by bringing disciplined approach towards-
2. Risk management
It provides an unbiased and objective view
It is a very critical function in the overall risk management system
Why do companies need Auditing?
Auditing is mandatory for all types of companies
It eliminates the chances of financial frauds
Audited financial statement of a company influences the decision of investors/lenders
It ensures compliances with laws and regulations
The main objective behind auditing of a company is to rely upon the opinion on the truth and fairness of financial statement expressed by CA/CPA.
Internal audit may take place on a daily, weekly, monthly or annual basis depending on the need. Some departments might be audited more than other if need be. For example HR department does not need a daily audit whereas a department related to manufacturing can be audited daily for quality control.
What are the scopes of audit?
People generally tend to think that the motive behind audit is just to check accounts and vouchers, but now as we know the importance of internal auditing let us see the broader functions of Internal Audit:
It gives a clear picture of all the financial reports and records
An internal audit scrutinises meeting discipline on timing and conduct
Staff discipline, hygiene, file arrangements and cataloguing is taken care of
All entries of loan applications, promissory notes and other documents are made
In-short internal audit provides a reasonable assurance over the accuracy of financial statement.
Our experts at Starters’ CFO will help you in conducting a fair and detailed internal audit for your organization.
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.
An internal audit is a form of audit process that occurs within the organisation to assess the conformity of internal processes and systems.
It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
Internal auditors are expected to provide recommendations for improvement in those areas where opportunities or deficiencies are identified.
Internal auditor is an auditor who is appointed by the management of the company in order to carry out the internal audit function.
Generally, the audit process is completed within six months, and most often in a few weeks.
According to Section 138 of the Companies Act, 2013: Listed/unlisted public/private or class of companies are required to compulsory appoint the internal auditors.
In general, an annual audit plan is developed by the Director for review by senior management and the Board of Trustees. The annual plan will include activities that must be completed each year for external financial reasons and for government and academic association requirements.
Internal Auditors are subject to ethical rules established by their professional associations and in accordance with the standards for professional practice developed by the Institute of Internal Auditors.
When something suspicious is identified, internal auditors can help determine its effect and evaluate the situation with financial analysis, observation or other methods to review and test a weakness of established controls.