An internal audit is an unbiased and independent assessment of internal processes within a company. It can be carried out by external auditors or internally and may have different goals and outcomes.
For management it is especially important to know if certain standards are not met or if policies are not followed within the organization. Audits should be carried out regularly and could be done annually, monthly, or even more frequently. While the results are usually very useful for managers when assessing performances and areas such as risk management, they are normally time consuming and require a lot of planning. Any issues within the company that are discovered during the audit could then be solved by experts in the field who have the knowledge and relevant experience. This ensures that employees aren’t assigned too many additional tasks.
Here are some of the key steps that medium or larger companies could consider when doing an internal audit.
– Identifying and planning
Auditors communicate directly with senior management, CEOs and the Board of Directors. The audit should be conducted by a designated committee within the company, if done internally. There are many different types of audits that each serve a different purpose, such as a financial audit or an environmental audit.
In order to prepare, staff on the audit team will investigate, which guidelines and industry standards should be met. Certain laws and regulations may need to be checked and company policies followed.
Later, the committee will determine, how the audit should be planned. Staff may need to be interviewed; documents reviewed; tests carried out.
– Working together with departments
Departments should be informed in advance of an internal audit. Good communication is valuable so that managers within the departments don’t feel burdened by the audit but rather see this as an opportunity for improvement.
– Reporting findings to stakeholders
The results need to be carefully documented in order to fully reap the rewards of the audit. An audit report helps summarize the findings and make it easier for stakeholders to read them. A professionally written report can be useful during the next audit to help document any improvements that were made.
The success of a business depends not only on the popularity of its products or services but also on how efficiently it operates internally. Internal audits are a useful tool with many benefits.