Home
The implementation and the correct organization of the internal audit done in consultation with internal audit companies in India largely contributes to ensuring the effectiveness of the activities of business entities.
Internal audit is a service function performed by internal audit companies in India, the users of which are:
- Members of the board of directors (audit committee) or similar body;
- Top executive management of the company;
- Line (operational) management of the company.
Each of the above-listed users of the internal audit has their understanding of what internal audit should do in the company and their priorities about the directions of internal audit activities. In some situations, priorities and expectations differ insignificantly, but sometimes quite significantly.
More important for board members is internal audit assurance activities, that is, independent reviews of the reliability and efficiency of the company’s systems and processes.
If an internal audit focuses solely on assuring the board of directors, then it is likely that the company will perceive it as a watchdog, ensuring that management is properly performing its duties.
If internal audit devotes a significant part of its time to consulting management, this may lead to a loss of audit objectivity. Therefore, the management of the company must decide what balance between the provision of guarantees and advice from an internal audit is optimal for the company, considering the goals of the board of directors and the objectives of management.
If we talk about the relative importance of the role of internal audit in different areas for different groups of customers (clients), then for boards of directors the most important are internal control and safety of assets, for top management – the area of risk management, for line management – increasing the efficiency of specific business processes.
To know who is responsible for the safety of material and monetary funds, their storage, accounting and inventory, preparation of primary documents, deviations from objectives, and corrective actions, there must be complete clarity about the distribution of responsibilities throughout the organization.
A necessary precondition for effective control is the existence of an organizational structure, which is objectively due to the internal control system made under the report of internal audits.
Internal audit is currently one of the most important links in the company’s corporate governance system.
Good corporate governance must be built on the effective interaction of four parties:
- The board of directors as a representative of the owners,
- Senior management,
- External auditor, and
- Internal audit
Each of these parties has its role and tasks. The role of the board of directors is to develop a strategy, define key policies, and monitor (oversee) the actions of executive management.
Executive management is responsible for the implementation of strategy and plans, the day-to-day management of the business. The role of the external audit is to independently evaluate the financial statements of the company.
Internal audit in the corporate governance system is an integral part of the company’s internal control system, playing a key role in ensuring effective company management. Since internal audit has its part in every level of the organization, it will be a big mistake to ignore its benefits for your company and not use it to keep a check on your organization’s activity and to ensure internal control in it. This being the case, contacting internal audit firms in India is what you should and need to do.