What Is Internal Auditing? Its Types, Values, Processes, and Standards
Audits are essential for businesses to establish governance and control. Many professionals in the industry think that tax and financial audits are the only types of audits. Well, many companies depend on internal audits to measure competitiveness. Every type of audit aims at increasing business continuity. Similarly, internal audits are important for a business to remove risks and boost continuity. However, business owners or in-house employees are usually unaware of internal audit processes. For the same reason, companies depend on internal audit services from CA firms. Read on to know the values and standards associated with internal auditing.
Internal auditing: definition and processes
Every company has to operate within a jurisdiction set by the government/authority. Federal and state laws imposed on businesses have to be followed at all times. Companies that ignore federal/state laws often end up in legal trouble. With internal audits, an organisation can ensure federal laws are being followed. Apart from compliance checks, internal audits can also help check the internal policies. A company needs to stay competitive in this modern era. Stakeholders and business owners need to know whether their company can survive in the market or not. For the same, they depend on internal audits and identify internal control, competitiveness, compliance status, and governance.
Internal audits can measure the competitiveness of the entire company or any business operation. For the same reason, several processes are involved with internal audits. Some standard processes associated with internal auditing are as follows:
- Internal auditors measure risks that can deteriorate the business continuity.
- Internal auditors measure a company’s internal control.
- The competitiveness, sustainability, governance, and operational efficiency of a company are measured via internal auditing.
- With internal auditing, a company can identify the effectiveness of its compliance policies.
- Individual business operations/processes like accounting and compliance can be cross-checked via internal auditing.
Values associated with internal auditing
Internal audits bring several values to an organisation. For example, external auditors might only look for errors in financial statements. In contrast, internal auditors look beyond financial statements and accounting books. They focus on metrics that can drive value in the company. Internal auditing brings sustainability, competitiveness, and control to an organisation. Apart from boosting the overall business efficiency, internal audits also increase the efficiency of an individual business process. Internal auditing can also cover broader topics such as environmental impact, employee welfare, and strategic growth. With internal audits, a company can ensure everything is in order.
Types of internal audits for businesses
For each business operation, there can be a different internal audit. Internal audits can also be conducted for the entire company. Based on their needs, companies can explore internal audit services. Common types of internal audits for companies are as follows:
- Compliance audits
- Environmental audits
- IT audits
- Performance audits
- Operational audits
- Risk audits
Instead of hiring in-house auditors, companies should outsource internal auditing processes. Usually, companies rely on CA firms to benefit from expert internal auditors. Boost business sustainability and agility with internal audits!
