Even in the 21st century, internal auditing is the company’s critical conscience. During an internal audit, the task of Internal Audit Companies is to examine the entire organization for undesirable risks and to align processes and departments more closely with the overarching corporate goals.
The internal audit is primarily concerned with auditing and advisory activities to support the company in achieving its goals. The focus is on evaluating, improving, and adhering to the discipline, which is intended to create added value for the company. (Read More: Strengthening Corporate Network Security: An Important Aspect)
Internal auditing tasks
The main functions of the internal audit are:
- Trust function: Monitoring of proper compliance with the defined processes and internal and external rules.
- Preventive function: Preventing and uncovering actions and behaviour that are harmful to the company.
- Information function: Creation of process transparency and decision support for managers.
As part of the operational control and monitoring, an Internal Audit Company has the following tasks in particular:
- Examination of all processes and procedures for their correctness,
- Uncover ineffectiveness within the company,
- Detection of irregularities and punishment of manipulation and criminal acts.
The internal audit also serves to assess the efficiency and usefulness of strategic measures and their implementation in the company. In addition, it also contributes to continuous process improvement in an advisory capacity for the management and the individual departments.
Internal auditing in enterprises is carried out in various legal regulations, scales, and institutional structures with different characteristics.
In the developing and changing world, both competition and economic conditions have increased the necessity for companies to manage their work efficiently and effectively. In this rapidly changing world, expectations from companies’ internal audits have also increased.
Internal audit assists management in evaluating and improving the effectiveness of companies’ internal control systems. It contributes to both internal and external processes by providing added value to the company by identifying and managing the risks in the business processes of the companies.
While the objectives of an internal audit may vary depending on the situation in which it is positioned, we can briefly describe it as follows.
It aims to provide independent and objective consultancy activities by evaluating the existence and effectiveness of risk management, internal controls, and other processes of companies or institutions, contributing to its development, and supporting the achievement of the goals of the company/institution to which it is affiliated.
Advantages of internal auditing
- Compliance with legal and internal company standards is constantly monitored.
- Potential for improvement can be identified and thus the economic efficiency of the company can be improved.
- Potential damage to the company can be identified at an early stage and, if possible, even prevented.
Businesses need internal auditing for reasons such as responsibility and accountability, revealing the mistakes and frauds in the business.
After conducting an internal audit, the auditors share their opinion with the managers about how they can make it possible to not encounter these problems again. The internal auditors also identify the frauds and deceptions that can be made by the employees, managers, and board members of the business, and make suggestions to prevent their occurrence.