An internal audit is the evaluation of all aspects of an organization by an internal auditor. Internal Auditors keep tabs on the financial reporting, accounting, operations, risk management, internal controls, and all other such aspects of an organization.
Unlike a statutory audit or tax audit which only happens at the end of the year, an internal audit is recurring. An internal audit may happen daily, weekly, monthly, quarterly, half-yearly, or yearly depending on the size and sector the organization is operating. It is, in fact, a continuous process, since improvisation is a continuous activity for an organization to sustain and grow.
For management who are looking to take the services of consultants for providing internal audit services for the first time, a few of the benefits are listed below:
Advantages of Internal Audit
1. More Effective Management
One of the biggest benefits of an internal audit is that it facilitates more effective management of the organization.
The internal auditor will be able to point out any weaknesses of the organization in the operations or internal controls of the company. So, the management can use these insights to better the chances of achieving their goals.
2. Ongoing Review
The process of an internal audit gives the organization a unique opportunity to conduct a review of the performances in the ongoing year itself. They do not have to wait until the end of the year to review the company’s performance. This also means that if they are not on the correct path, this will help them change course and correct their mistakes immediately.
3. Performances of Staff Improve
The staff of the company remains alert and active. This is because there is the fear of their mistakes being caught by the internal auditor almost immediately.
This will help improve their efficiency and performance. Also, they do not attempt to defraud the company for the same reasons. And on the other hand, it is a good morale booster for honest employees.
4. Ensures Optimum Use of Resources
One other benefit of the process of internal control is that it can be used as a tool to promote the optimization of resources. It will help point out the areas in which resources are being underutilized or wasted. And then these can be corrected. It will help control the costs and expenses of the company.
5. Segregation of Duties
Internal audit helps promote the segregation of duties, where a maker and checker controls are implemented. It is important to keep a check on and monitor the activities of all the departments and all of their employees, where self-monitoring.
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