People often ask: If our company is smaller, should we invest our already scant resources in an internal audit?

Any information security and compliance programmer should include internal auditing as a crucial component because it is a useful tool for risk management that is both effective and appropriate.

By confirming internal controls like operational effectiveness, risk mitigation measures, and compliance with any applicable laws or regulations, internal auditing helps the board and management oversee an organization’s culture, policies, and procedures.

Monitoring and ensuring that all of your company’s assets have been properly secured and protected from threats requires internal auditing programmers. Verifying that your business processes adhere to your written policies and procedures is also important.

Client expectations, technological advancements, shifting market and regulatory environments, and organizational challenges all present growing opportunities for organizations. In this situation, internal audit is crucial in assisting management in navigating a variety of business risks.

Here are five justifications for why internal auditing is essential for your company’s adherence to legal and industry standards.

Internal Audits Provides Objective Insight

Auditing your own work is impossible without a clear conflict of interest.

To obtain this objective insight, your internal auditor or the internal audit team cannot be given any operational responsibilities. Cross-training employees in different departments to be able to audit another department is acceptable in circumstances where smaller businesses don’t have extra resources to devote to this. The internal audit function adds value to your company by offering an objective and unbiased viewpoint.

Internal Audits Improve the Efficiency of Operations

You can get assurance that you are doing what your policies and procedures say you are doing and that these processes are sufficient in mitigating your specific risks by objectively reviewing them.

You can find control suggestions to raise the effectiveness and efficiency of your processes by regularly reviewing and monitoring them. Thereby enabling your organization to depend more on procedures than on personnel.

Internal Audits Evaluate Risks and Protects Assets

Through a methodical risk assessment, an internal audit programme helps management and stakeholders identify and prioritize risks. A risk assessment can assist in finding any environmental gaps and enable the implementation of a remediation plan.

Your internal audit programmer will assist you in keeping track of and documenting any alterations made to your environment as well as ensuring the reduction of any risks discovered.

Internal Audits Evaluate Risks and Protects Assets

Through a methodical risk assessment, an internal audit programme helps management and stakeholders identify and prioritize risks. A risk assessment can assist in finding any environmental gaps and enable the implementation of a remediation plan.

Your internal audit programmer will assist you in keeping track of and documenting any alterations made to your environment as well as ensuring the reduction of any risks discovered.

Internal Audits Assess Controls

Internal auditing is advantageous because it enhances the organization’s control environment by evaluating productivity and operational effectiveness. Do your controls serve their intended purpose? Are they effective at reducing risk?

Internal Audits Ensure Compliance with Laws and Regulations

You can make sure that all applicable laws and regulations are being followed by conducting internal audits on a regular basis. You may feel more at ease knowing that you are ready for your upcoming external audit. Internal auditing is a significant and valuable activity for your organization because it helps you gain the trust of your clients and prevent expensive fines associated with non-compliance.

Internal Audit v/s External Audit

Both internal and external audits aim to analyze a company’s component in order to reach a particular conclusion. The two types of audits do differ greatly from one another, though.

In an internal audit, the business frequently has the option of choosing its own audit team. It might be advantageous to include on the team certain employees who have very specialized experience. In an external audit, the company can frequently choose the external audit firm, but frequently has no control over the specific employees who are included in the audit.

Depending on the audit, there might be some requirements for the external audit staff. For instance, a Certified Public Accountant (CPA) must certify the financial statements in an external financial audit. No member of the audit team must be a CPA when conducting an internal audit.

An audit report is the product of either audit, but they are used for very different purposes. Internal management typically uses an internal audit report to enhance the company’s operations, procedures, or policies. An external audit report is frequently needed for external reasons and is more frequently used by people outside of the company.

Finally, the engagement will be very different in nature. Employees of a company may frequently freely offer advice, discuss unrelated issues with the company, or have a very flexible consulting agreement during an internal audit. A very specific scope is frequently established during an external audit, and the external auditor will frequently take great care to ensure they stay within their audit parameters.

The Bottom Line

A company can choose its own audit team to examine its operations through the internal audit process. The company is frequently in a position to choose the internal audit’s scope. Additionally, the business can frequently select almost any justification for an internal audit. Internal audits are extremely valuable for improving internal operations and informing management of ways the company can improve, even though they are less useful for fulfilling external reporting requirements.