Internal Audit is a process in which the operations, procedures and control measures of an organization are examined and analyzed thoroughly with an objective of improving the same to achieve the goals and aims of the company. They are conducted by a person appointed by the management of the entity called as internal auditor. The internal auditor’s key task while performing the audit includes a complete set of Internal Audit Activities that are to be fulfilled for proper evaluation. These Internal Audit activities are as follows-
- Internal Control Reviews: One of the primary Internal Audit activities is to perform reviewing of the internal control system in an organization. It involves evaluation of adequacy of the segregated duties, reviews and approvals from supervisory, transfer of accountability, reconciliations, checks and critical forms, physical safeguards over the cash amount and written procedures and their existence. Reviewing the internal controls as one of the Internal Audit activities have the following four categories to be checked and ensured. These categories are-
- Operational Reviews: It is conducted to thoroughly examine the uses of available resources. It helps in evaluating the use of the resources in effective and efficient manner. Operational review is one of the Internal Audit Activities in which the accomplishment of the organizational goals and aims are considered as well.
- Financial Reviews: Here the auditor has to review the transactions in the accounts books and reports and verify their accuracy and fairness. The main purpose of this activity is to ensure the fairness of the financial activities of all the units and departments and whether they have reflected the same in the financial reports and records.
- Compliance Reviews: It determines the degree of adherence or compliance with the laws, regulations, internal and external policies of the organization.
- Information System Reviews: Reviewing the information system of the company is an important task. It addresses the environment of internal control that is automated and the processing system for made transactions. It also, checks the working of the systems and how people use them.
- Procurement Reviews: Review of the procurement under the Internal Audit Activities, are designed in a manner to evaluate the Departments procurements, there independence, objectivity, fairness and accuracy. These are usually requested by the auditors and auditing team.
- Providing Advisory and Consultant Services: A full-fledged intern audit can actually provide the management with advice and in-house consultation on the procedures and measures related to the accounting systems, internal controls and the issues pertained to the improprieties of the employees. While providing the Internal Audit Service, the auditor is liable to provide advisory and consultation.
- Investigations: The auditor has to investigate all the complaints against the employees, top management and other officers as well. This may include reviewing the allegations and violations of the state or central laws. It covers a wide range of matters that can be confidential and sensitive in nature.
- Coordination of Audits and Reviews Conducted by External Agencies: While the Internal Audit is performed, the audit coordinator provides a central point of view to control all the Internal Control Activities. The organization also, conducts a fair review by the various state and central agencies and external auditors.