FIND OUT WHAT INTERNAL AUDITING AIMS TO ACCOMPLISH
Find out what internal auditing aims to accomplish
Internal auditing is the act of having an organization or department conduct independent reviews of their internal processes, including reviews of the systems that are in place within the organization, impartially and in keeping with the company standards and are considered to be part of the overall systems of internal control established within the organization. Audits are conducted by the internal auditors in the company and give management assurance that the controls in the organization function efficiently and that fraud is not being perpetrated.
The objectives of internal auditing
The objective of internal audits is to evaluate a company's control effectiveness, financial system soundness, operational efficiency, and other factors within the organization. Internal audits are conducted by a team of professionals within the organization.
Internal auditing is an objective, independent, and consulting activity within the internal control framework of an organization aimed at adding value to operations and making them more efficient. Also, it improves processes of risk management, corporate governance, and internal control to assist the company in meeting its goals.
Keeping things under control:
An Internal Audit's main objective is to maintain the integrity of financial records and to ensure the efficiency of business activity, as well as to provide management with peace of mind, both of which are provided by an Internal Audit.
Integrity in Accounting and Fraud Detection:
During internal audits, the organization's accounting system is thoroughly examined, along with verifying the proper authority for transactions such as the acquisition, retirement, and disposal of fixed assets. In order to determine the true facts and figures, it compares the results with entries. All entries are verified in order to decrease the probability of errors or fraud.
Review of business operations:
Audits are conducted to review the functioning of a business and take action to ensure it is operating effectively. The functioning of the current year can be examined in detail. Weak points can be identified and measures can be taken to correct them.
Safeguarding assets:
Conducting an internal audit is necessary to ensure the protection of assets. An internal auditor can examine the valuation, verification, and possession of assets belonging to the company with a proper record of assets. In doing so, it would confirm that the company's assets were purchased or sold legally.
Investigate errors and keep a close eye on them:
Internal audits are performed to detect errors that might otherwise occur in accounting documents, enabling management to access the records in order and minimizing the chance of errors occurring. The accounting department could correct mistakes to prepare final accounts at the end of the year to assist the external auditor.
Providing assistance to management and determining liability:
Management benefits from internal auditing since internal auditors can point out weaknesses in an organization and internal audits can be used to correct them, thus saving money and time. An internal audit can determine the liability of employees since the duties in an organization are spread throughout the employees, it becomes easier to identify negligence on the part of employees. An internal audit can help pinpoint the individual responsible for an error.
Analyzing performance:
In order for an organization to achieve its goals, an internal audit can be used to check performance appraisal and evaluate the efficiency of each management function.
Make suggestions and propose innovative ideas:
A company's internal audit staff can provide suggestions about how to improve business activities by conducting an internal audit. Internal audit staff will be able to suggest strategies for overcoming obstacles. However, an internal auditor cannot force management to implement his suggestions.
It is possible to gain new insights into various business matters during internal audits. Therefore, auditors are able to offer helpful ideas concerning procedures, marketing, financing, and other aspects of the business.
Utilization of resources:
Basically, the objective of an internal audit is to determine whether resources are being used effectively. Misusing resources would naturally increase the cost of doing a given business, so the efficient use of resources goes hand in hand with the proper management of those resources.
Policies concerning accounting:
Auditing an organization's internal policies would give an auditor the opportunity to identify weaknesses in its internal controls and improve its accounting policies by understanding the accounting system and its procedures. The internal auditor could identify weaknesses in the internal control system and provide guidance on how to fix the accounting policy.
Conclusion
In other words, this is a system or procedure that is affected by and designed by people in charge of management, governance, and other personnel in order to achieve company objectives regarding compliance with regulations, reliability of financial reports, and efficiency in operations. It not only prevents employees from stealing assets, but it also improves operational efficiency through improved timely financial reporting.