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Nowadays, most business owners and investors are well acquainted with the practice of establishing internal control in their companies through the help of the Best Internal Audit Firms in India.
Generally, an audit is focused mainly on the control of the safety of inventory, the efficiency of spending money, and the use of other resources, the fulfillment of orders of the management and higher authorities, as well as in the investigation of fraud.
But internal audit shifts the focus from identifying violations and mistakes to punishing those responsible for providing recommendations for improving the organization’s activities; expands the range of tasks in the direction of control systems, risk management, corporate governance.
Internal audit has 2 components. On the one hand, this is a function that should be built in any large company, and which provides an independent view of the state of the internal control system, as well as business processes in general.
On the other hand, this is an area of activity, which is not built as a management function but as a certain order of actions to prevent various risks for the business.
Internal audit carries out its activities in the interests of internal users of information – executive management, council, and owner. An internal audit is carried out on an ongoing basis, i.e., represents the day-to-day work of the company. It covers audit types such as operational audit, compliance audit, and financial statement audit and, accordingly, includes their subject areas and uses their methods.
Regarding the objectives of an internal audit function, they can vary depending on the size, structure of the organization, and management requirements. The functions of a company’s internal audit function may include:
1. Compliance Review. Internal auditors may be responsible for verifying compliance with the law and other external requirements, as well as with the requirements of the policies and guidelines of management and other internal requirements of the organization.
2. Review of operating activities. Internal auditors may be responsible for reviewing the economy, efficiency, and effectiveness of operations, including the non-financial aspects of the organization.
3. Risk management. Internal auditors can help an organization identify and assess significant risks and help improve its risk management, internal control systems, and check Internal Financial Controls Applicability.
4. Monitoring of the internal control system. Internal auditors may be responsible for reviewing controls, monitoring their performance, and recommending improvements.
5. Corporate governance. Internal auditors can participate in the corporate governance process by contributing to the achievement of ethics and values, performance management and accountability, communicating risks and controls to relevant functions in the organization, and establishing effective communication between those charged with governance.
6. Study of financial and operational information. Internal auditors may be responsible for reviewing the tools used to identify, measure, classify and report financial and operational information, and for detailed examination of individual items, including detailed testing of transactions, balances and processes performed.
The expediency of an internal audit is determined by factors as the stage of the company’s life cycle, its scale, the degree of formalization of processes, and the role of the owner in management. So, to make it certain that your company is walking on the right path, it is essential to take the help of available tools like an internal audit. If you don’t have any idea about this or want to know more about it, we suggest you contact Best Internal Audit Firms in India.