The process of Internal Audit is an analysis and evaluation method for business organizations. It is conducted by the internal audit staff members in the company. Such is basically conducted by the company to examine the three main areas of the entity namely-
- Risk management
- Internal control procedures
- Corporate governance
While evaluating all the key areas of the company the internal audit accomplishes the main objectives behind the overall planning and performance. These may include assurance about the control system of the company, identification of fraudulent activities, efficiency of the operations of the business, soundness of the financial system, etc. With all these objectives in mind, the organizational internal audit and financial institution internal audit is conducted.
Internal audits are conducted by the professional presence in the company or appointed by the company. These are called as an internal auditor. They are the ones who conduct or perform the audit in the entity from its first step till the very last step of the whole procedure.
Since internal audits can be really important for the companies or taxpayers, therefore it becomes even more important for understanding various aspects of the audits. One must be aware of the objectives, benefits, limitations, and characteristics of internal audit. For now in the article we will focus on the basic aspect that is characteristics of internal audit in India.
The following are the characteristics of Internal Audit carried in an organization-
- It ensures the performance and functioning of the internal control systems formulated by the company’s management.
- One of the main characteristics of an internal audit is that it can cover both the areas and issues related to the financial and operational field.
- The process of internal audit is generally taken or understood as limited as it is managed by the person who is qualified to audit the company’s governance and procedures.
- Another important characteristic of internal audit is that it is an independent activity and is separate from other departments but being within the reach of the organization this means the audit members are employees of the company.
- It involves reporting the audit findings by the auditor to the audit committee.
- One more characteristic of internal audit is to involve both financial as well as non-financial areas of the business operations especially those that are directed towards the plan of the annual audit.
- It also deals with the risks that the business might face and also examines the actions taken for the management of such risks effectively and efficiently. This is done in the internal audit service so as the company can achieve the various objectives set by them.
- One of the characteristics of an internal audit is that it limits the organization’s governance, controls, risk management, and operations of the business.
- It is conducted based on the business owner’s resolution to measure the efficiency of the business operations covered in the company.
It takes into consideration the applicability and helpfulness of the business practices that the officers have deployed in the management of the organization.