The importance of internal audit for a firm
Internal auditing is an activity that is independent and consultative to add value to the operations of the organization. Management can improve internal control with the help of an internal audit. It helps in identifying the weaknesses in the system and also provides an opportunity to rectify them. Internal auditors deal with issues of importance to the continued existence and prosperity of any organization. An internal audit is conducted at a specific interval to check if a company follows the internal protocols and standards. Managing audits internally helps the management of the organization identify if anything is wrong with the organization. An internal audit manages risk and monitors the effectiveness of a company’s internal controls and governance.
Internal audit has faced numerous challenges as a result of global economic conditions and technological advancements:
The media and government have set high expectations even though it is easy to follow the regulations. Internal audits do look at the financial controls, but, they do it partially. The internal audits spend most of their time looking into what we call the regulatory controls and the operational controls. The internal audit department should be able to justify its expenses and show how they directly fit into the company’s bottom line. If the department fails to do that, then the internal audit department won’t be able to exist anymore. Internal audits are a major part of an organization’s risk management strategy. They are used to handling risk by having internal control over financial records and maintaining the financial stability of their organization. Online security must be monitored so that the organization can ensure that information is kept confidential and accessible only to authorized individuals who have been granted permission by the organization’s authorities.
