What Is An Internal Audit & How You Can Improve It?

Auditing and Assurance is the main and most important component of any organization or company. It helps organizations in many different ways, which include maintaining compliance, assuring the company that every operation is being done right or reporting if anything is out of the line. There are mainly two types of audits that are used within the company to evaluate the overall financial health of a corporation. The two main types of audits that take place are Internal audits and External Audits.

However, in this article, we will be discussing specifically internal auditing and what it contains. For your understanding, we have divided it into different sections giving a full brief on what it is and what it is all about. Therefore, let us just get into it.

What Is An Internal Audit

 An Internal Audit is a department of professionals within a company whose tasks are providing unbiased and independent reviews of all books and all the accounting processes. The professionals who execute internal audits are called Internal Auditors and they are liable to provide seniors or the head of their department and governing bodies with an objective source of information regarding the following: Risks regarding the company’s finances Control Environment Operational Effectiveness Compliance with applicable laws and regulations

What is the Role of Internal Audit?

 The main purpose and role of an internal audit are to report to the senior leadership or the governing body that everything is according to the directed plan given by the Chief Executive Officer (CEO) or Board of Directors (BoD). All of the internal auditors must be independent of any internal politics and bias avoiding any emotion while focusing on the fairness of their reports.

What is the Purpose of an Internal Audit? 

The purpose of an internal audit is to evaluate how well the company is performing and if it is following established standards, policies, regulations, and metrics. These audits can cover various aspects of the business such as financial reporting, accounting, IT systems, corporate governance, and internal controls.  The main objective of internal audits is to ensure that the company is operating efficiently, effectively, and in compliance with the set rules and regulations. In addition to this, internal audits may also assess the performance of critical business operations, such as supply chain management, to identify areas for improvement. Ultimately, the findings of the internal audits are reported to senior management and the audit committee of the board of directors.

Difference Between Internal Audit and External Audit

The essential difference between both sides is that an internal audit is conducted by a team of auditors within the company whereas an external audit is conducted by an independent external team of professionals. Internal auditors firsthand check the financial health of a company and external auditors cross-check all the reports provided by the internal auditors. However, the work of external auditors is not limited to checking the reports passed by the internal auditors. External auditors check for any theft, fraud, and the company overall. They work closely to ensure that everything is transparent and accurate. With that, they also maintain compliance with all the rules and regulations.

The Bottom Line

 For the best services, you can contact Spicer Pegler as they have extensive experience in this field. They have been providing the best services to their clients including CFO Services, Corporate Tax Consultant and more for over a decade and have worked with businesses of all types and sizes. You can visit their website to check all of the great auditing and accounting services that they offer.