What is Internal Audit?
The role of an internal auditor is to carry out an independent appraisal of how a company works, their processes and the risk that may affect the business. Typically those carrying out the internal audit work across all business functions to gain a complete and comprehensive overview of the company.
The basic functions in an internal audit job can be broken down in the following ways:
Dealing with Risk – in every company there are undesirable situations and outcomes. Those working in internal audit jobs have a responsibility to help companies identify and understand the risk. Through their research of the company and market as a whole, they are able to analyse trends and understand whether the current processes can deal with the risk. Both the experience of the auditor and their objective distance from the departments they are assessing enables them to see risk and opportunities that may have been missed by those closer to the situation.
Reporting on the Operations of the Company - Internal audits often have the objective of reporting on the processes and operations of a company. Internal auditors are often experts in knowing how companies can be run more efficiently and effectively. With their overall view of the company, they are able to identify duplication of work and responsibility, as well as highlighting needlessly difficult procedures. In their reports an internal auditor would present their findings to help the business or organisation work better.
Uncovering Fraud and Malpractice – most companies would hope their employees are neither carrying out fraud nor acting unprofessionally. However the investigations of an internal audit can often discover such behaviour. Employing an auditor can act as a safety net for the organisation, helping them to root out such behaviour before it potentially damages the company.
Identifying and Preventing the Worst Case Scenario – similar to the way they identify risk, internal auditors can help with crisis and emergency planning, whether it’s dealing with catastrophic data loss in an Accounts firm or identifying a poor pricing process to deal with rising costs in a manufacturing firm; they can help identify and prevent situations which would have a significant negative effect on a business.
Creating and Ensuring Appropriate Controls are in Place – most efficient companies have effective business controls in place, such as cheques requiring sign off by a suitably senior member of staff. An internal audit can explore these controls and assess whether they are suitable. They will recommend when the controls are seen as too stringent or too lax.
Making Recommendations for the Future – the most significant responsibility for an internal auditor is to make suggestions for future strategy. It is these recommendations where the employer gets the greatest value from the person working in internal audit.
Witten by Jonathan Hickstead for CareersinAudit.com
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