6 Ways to Strengthen Your Internal Audit Structure

Ways to strengthen Internal Audit Structure

Auditing is a dreaded word across businesses but is still a necessary process for every organization. Auditing is conducted to determine the quality of financial statements. Additionally, it is also used to analyze and form opinions on business operations and track potential investors for investment.

In this blog, we will discuss the importance of a robust internal audit structure and various kinds of audits.


What is an internal audit?

An Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It is a consultative and proactive approach towards assessing the company operations and internal controls oIt is also done for recommending improvements for the same.

The role of an internal audit is to provide independent assurance regarding an organization’s risk management and governance. They should also ensure that internal control processes are operating effectively.

There are different types of internal audits depending on the function being audited. It includes information system audit, compliance audit, environmental audit, controls audit, operational audit, performance audit, and specialized audit. Moreover, the qualities of a successful internal auditor are a visionary, effective communicator, teamwork, relationship builder, diversity,

On the contrary, an external audit is a type of audit where the financial records and statements are examined to form a perspective on the company’s financial performance.

To improve the effectiveness of an internal audit, it is crucial to have a systematic internal audit structure. The same goes for an external audit.


 Strengthening internal audit

Auditors need to be able to understand the client’s business and industry. This also requires the ability to frame a picture of the client’s business quickly. It also includes the organization and critical attributes within it. Moreover, a good auditor can sort out connections and linkages within the organization to focus the audit approach.

Moreover, it is incredibly crucial to have the best internal audit structure in your company. A robust internal audit structure will also ensure to improve your business processes. Furthermore, it should make you ready for the competition in the industry. The internal audit best practices that can ensure the best internal audit structure are:

Positive and committed internal audit team

Generally, companies and employees are wary of the internal audit team. Therefore, they are known for pinpointing errors and mistakes in all processes and operations. That is also a part of their job. However, they must also appreciate the company or department when doing well.

They should also appreciate when processes are well-aligned with the objectives. Overall, they must remain committed to the company and its growth, and they should not just focus on the negative aspects of the company.  

A solid and clear reporting structure

It is imperative to define a clear reporting structure for the internal audit team for transparency. Additionally, any conflict in those parts may affect the communication and performance of the internal audit function.

Focus on high-risk operations

Instead of auditing numerous functions and operations, you should focus on more risky functions of the company. Such quality internal audits of high-risk operations will benefit the company more, leading to more effective business processes.

Engage in the strategic planning process

The internal audit system ensures auditing of risk management, internal control system, and operational activities. However, it must also include auditing the strategic planning process, and strategic planning falls under the governance and oversight function.

Therefore, the internal audit team must include it in its scope of work. The internal audit process must audit the assumptions taken to do the planning. They should also check the business models used and data based on which strategic plan is prepared.

Adopt data analytics

Adopting data analytics in the internal audit process can significantly affect the function. The effectiveness of the internal audit of large amounts of clean, structured data generated because of data analytics improves by a considerable margin.

Data analytics enables internal auditors to extract useful information and identify and analyze patterns. Moreover, it detects any inconsistencies in the data. It becomes easier to identify risks and generate more insights from information, and thus you can arrive at the results faster.

Add value to business operations.

The internal audit team must align the audit procedure with the organizational goals and objectives. Therefore, the direction remains right always. They must also identify the missing opportunities of the functions and departments based on the goals.

Hence, they can give the right direction to practical efforts and achieve overall operational excellence. Furthermore, the internal audit team must work to identify the wrong, make it right, and add value to it.

With all these best practices for internal audit in use, the internal audit failure reducesDespite these internal audit best practices, the internal auditing team faces a myriad of challenges. Therefore, you must overcome for better results. Some of these challenges include different expectations of multiple company stakeholders and expectations of enhanced value.

One solution for such challenges is for the internal audit team to develop their skills.  Another solution is to use internal audit consulting services provided by many internal audit-consulting firms. Such internal audit companies can provide specialized skills in IT, analytics, governance, security, fraud, and value-generating analysis.


Our internal audit services ensure the highest standards for your business operations.


Our internal audit services

We provide internal audit services to various industry sector clients. It varies from Corporate setups to Multinational organizations to make their business processes consistent, efficient, and effective.  

We provide an unbiased opinion on your operations through our internal auditing services and create a plan to eliminate or reduce the risks. Hence, generate operational excellence for you. We keep you compliant with all statutory requirements and safeguard your assets from various tasks.

Moreover, we make your business operations effective, efficient, and compliant with the relevant laws and regulatory requirements.


FAQs

Is there any difference between Internal audit and Internal control? If yes, what are they?

Yes, internal audit and internal control are different. Internal control is the first line of defense for a company. It is a system comprising policies, procedures, and measures implemented in the company to check if it can ease off the risks and meet its objectives. The operations and administration department are responsible for conducting ongoing checks for a system of internal control, diminishing the risks, and achieving operational effectiveness and efficiency.

On the other hand, an internal audit is a function which acts as the third line of defense for a company to evaluate the first (operational management functions) and second (risk and compliance functions) lines of defense. This process does not include the identification of risks a company faces and the recommendation of controls to implement to manage those risks. However, it just understands the risks and assesses the effectiveness of the internal control system.

How much time dos the internal audit of a company take?

The time taken for an internal audit is not a fixed duration, and it depends on the size of the company and the business domain of its operations. Based on our initial discussions with the client, we specify the duration of the internal audit work.

What is the difference between an external audit and an internal audit?

External audits are conducted as a statutory process, and it is mandated by regulators, bankers, or shareholders, while internal audit are randomly conducted at any time of the year. Moreover, external audits help build a positive public image of the company; internal audits help identify errors in the process, fraud situations, and instances of damage to the company’s reputation.



NR Doshi & Partners is a leading audit and accounting firm with over 35 years of experience in the industry. We offer a range of services, including outsourcing, accounting and finance, various consulting and advisory services, business feasibility studies, company formation, and various types of auditing.

Our team of expert professionals and consultants believes in a detailed study of the client, the development of customized solutions, smooth execution, and flawless services.


Our robust internal audit services for a more significant impact on your business


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