Internal audit plays a crucial advisory role in adding value to an organisation. Its main role is supporting and facilitating strategic changes while at the same time identifying the risks associated with such changes.
Audits provide essential information about a company’s weaknesses and threats to its management allowing it to close security gaps. Without audits, it will not be possible for any organisation to reach its full potential and perform better.
In this article, let us look at the role internal audit plays in balancing risk, cost, and value.
Role of Internal Audit in Enhancing Governance and Risk Management
Internal audits involve the proper examination and evaluation of the internal control system of an organisation. To carry out this entire process, internal auditors follow a systematic and disciplined approach.
They conduct a proper analysis of the information gathered, assess risks, and test controls to ensure that the organisation is operating efficiently and effectively. Most importantly, internal auditors provide valuable feedback regarding the areas of improvement for minimising risks and maximising operations in an organisation.
Auditors use advanced data analytics tools which enable them to detect potential risks quickly. Apart from this, they also take part in collaboration with other risk management functions for providing an integrated approach to risk management.
Stages Involved in Internal Audits
The entire process of internal audit involves four stages, namely, planning, fieldwork, reporting and follow-up. These stages are discussed as follows:
- In the planning stage, auditors take the responsibility of identifying key areas to audit and develop a detailed layout accordingly. This plan takes into consideration of the objectives, methodology, and criteria for proper evaluation of the audit schedule.
- In the fieldwork stage, auditors collect and analyse data. They use different techniques such as data analysis, sampling, and observation to match their evidence. After identifying weaknesses, they provide recommendations as well for further improvement.
- In the reporting stage, internal auditors prepare a draft report providing a summarisation of their findings, conclusion, and recommendations. This report consists of an executive summary, the scope of the audit, and methodology, along with the findings and conclusion. The recommendations are provided to the board of directors who reviews the report.
- In the follow-up stage, auditors review the feedback and make necessary changes. Here, internal auditors work closely with the management and track the progress of implementation. They also follow up to ensure that all the required changes are made.
Thus, it can be concluded that internal audits help an organisation in achieving its strategic objectives. This helps a company instil confidence in its customers, shareholders and investors and get constructive feedback to address governance, internal controls and risk management.
We have a team of expert auditors, tax advisors and risk advisors to do comprehensive internal audits and assurance. They will ensure that your company’s risk management is well taken care of and provide hands-on assistance with implementing changes in your company.