What are the Outcomes of Internal Audit?
Internal audit activity mainly includes two functions: assurance services and consulting services. Assurance can be defined as the activity of providing reasonable assurance that the risks are managed by appropriate types and levels of control. Consulting activities are rather a minor portion of internal audits but might be conducted if requested by business units or management.
So basically the role of internal audit is to provide independent assurance that a company’s risk management, governance, and internal control processes are operating effectively. To be effective, the internal audit activity must have qualified, skilled and experienced people who can work in accordance with the code of ethics and the national and international standards.
An internal audit essentially serves as the eyes and ears of the company’s owners or senior leadership and board of directors. Their assigned work may cover any area of the company, And not only these Internal audits have historically been aligned with accounting and financial reporting audits.
Benefits and Outcomes of Internal Audit:
Having now articulated management’s responsibility for internal controls and how internal audit might play a role in assisting management to fulfill that responsibility, let’s look at some specific benefits that an Internal Audit function can provide to a company and its management:
- The scope of the internal audit is defined by management or the Board.
- Internal Audit “reports” directly to management or the Board.
- Improves the “control environment” of the company.
- Makes the company process-dependent instead of person-dependent.
- Identifies redundancies in operational and control procedures and provides recommendations to improve the efficiency and effectiveness of procedures.
- Serves as an early Warning System, enabling deficiencies to be identified and remediated on a timely basis (i.e. prior to external, regulatory, or compliance audits).
- Ultimately increases accountability within the company.
Management would be well served by having an internal audit function assisting it with its risk assessment process and ensuring that the responsibility for maintaining a system of internal controls has been fulfilled.
So with a proper internal audit function, management would have, at its fingertips: an advocate, a risk manager, a controls expert, an efficiency specialist, a problem-solving partner, and a safety net.
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