What is Internal Audit?
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Internal Audit can be said as an independent, consulting activity that assures objective fulfillment. It is designed for adding value and improving the business operations. There is always the need of internal audit in business because it is the internal audit for business that is responsible to assess the control and governance, effectiveness of the risk management for providing an insight about the same. It helps by providing key recommendations to enhance the procedures related to the following-
- Compliance with the prescribed provisions, laws and regulations.
- Effectiveness of the business operations.
- Reliability of the reporting and financial management.
Internal Audit for business also involves investigation and enquiring the fraudulence activity and actions in the company. Also, post investigation audits are conducted for identifying the breakdown controls and establishing a financial loss.
Purpose of Internal Audit for Business:
The main mission of conducting internal audit for business is to enhance the organizational value and to protect the same by providing objective assurance, risk-based insight and advisory. The audit activity also helps in building a consistency in trust and strengthening the management’s relationship by delivering internal audit services that are of high quality and distinctive in nature.
Adding value with Internal Audit for Business:
One of the main objectives of conducting the internal audit for business is to add value to the efficiency and effectiveness to the operations of the business and also provide the following-
- The internal audit functions and works all across all the areas of the organization and review the tangible aspects of operation like Information Technology system and supply chain as well intangible aspect of operations such as culture, ethics and code of conduct in the organization.
- The internal audit for business works very closely with the management of the company to review the operations and systems for seeking the risk management and its applicability. It also checks for the processes and procedures in the organization and whether they are in the right place and whether they are rightly followed. This helps in providing an indication of the integrity of the processes and systems of the organization, their capability in supporting the goals and objectives of the company. It also helps in identifying the improvement areas as well.
- The internal audit function looks into the books of accounts, financial statements and financial risks and beyond it to consider the wider and important issues such as growth, development of the business, reputation of the organization treatment of employees and impact of the business operations on the environment. All those processes that greatly influence or impact the operations of the business must be included in the scope of the internal audit for business.
Functions of the Audit Committee in Internal Audit for Business:
The main functions of the audit committee conducting the internal audit for business are as follows-
- Approving the risk-based internal audit planning
- Approving the charter for internal audit in the organization.
- Receiving the communications on the performance of the activity of Internal Audit for business, from the Senior Manager of Internal Audit in relation with the audit plan and other matters.