How internal audit improve business performancePosted by ICS Admin Under Financial Planning On July 20, 2018
Dynamic market patterns and changing stakeholder expectations continuously demand business organizations to perform better and come out with innovative solutions. For any business or organization, internal audit is a great method for analyzing the overall business performance. It is imperative to ensure regulatory compliance, data security and adherence to performance goals on a routine basis. Internal audits also evaluate possible risks which the company may face in a competitive business environment. The audit reports can be assessed to focus on areas where the process could be improved and make changes to efficiently accomplish the desired results.
Internal audit can be considered as a preliminary round before the company faces a third party or external audit. This can help to have all necessary documentation in place and take actions to eliminate any internal errors. As audit officers are always vigilant about the latest legal policies and rules, they can educate the business owners about the possible challenges and missing links if any. An internal auditor is an ideal person to detail the employees about the prevailing company objectives and policies.
Internal Vs External Audit
Internal audit is a flexible and more organization friendly procedure when compared to an external audit. While an external audit reflects the financial status and competitive position of the business, an internal audit tries to inform the employees about ways to improve efficiency and meet their professional goals. A major intention of internal audit is to find security glitches, assess & eliminate the risks involved in a timely manner.
What does an Internal Auditor do?
The auditor officers communicate with people at different levels of the organization including the top management and stakeholders. The audit report will detail the auditor’s suggestions for improving the organizational performance. In most cases, an internal auditor is a trusted person who is well aware of the organization’s history and activities. However, it is advised to appoint a person who is outside the organization so that there will be no bias. Third-party auditors are more efficient in control and risk assessment when compared to internal auditors.
The period of an internal audit depends upon the size of the organization and scope of the audit. In most cases, when the internal audit is completed, the employees of various departments will receive a copy of the report stating recommendations for business improvement.
The process of internal audit is highly critical in industries like financial institutions and healthcare providers. It serves as a period for the management and the employees to interact and work together to analyze the business progress. During the audit, the employees can learn more about the company’s overall status in the market and gain insights about their personal contributions.
Cybersecurity & Internal Audit
In this digital era, a strong defense mechanism is required to ensure data security in the online media. Many of the organization’s critical information will be present in the digital format and the company needs to safeguard it from cyber attacks. Often the higher management will be unaware of the possible risks revolving around cybersecurity. Internal auditors can play a major role in providing timely advices and alerts to avoid any online security breaches. They can ideally collaborate with the organization’s IT Department to develop an audit plan based on cyber security.