Internal audit turns out to be an internal inspection of the company’s proceedings to identify the loopholes in the working cycle of a business and fix it accordingly. An internal auditor takes charge of carrying out the process effectively and ends up drafting an internal audit report where the company proceedings and tasks to be done are mentioned. The complete procedure can be carried out quickly if the management takes care of absolute essentials. This guide will provide you with the key elements that you need to take care of before implementing the internal audit process in your organization. Let’s understand the initiatives step by step.
1.Strategic Business Planning
Business planning turns out to be an essential element to grow a business and achieve the organizational goal. From the very first day of the commencement of business, the company’s plans need to be drafted so that you can get a direction regarding the necessary steps to be taken on time. Also, discussing these business plans with the internal auditor can give you more insights into the business aspects, and you can have gain inputs regarding the consequences.
2.Error-Free Bookkeeping Records
You need to keep a check that the accounting records of your business are error-free, as minute errors might lead to big problems. It is to be noted that the bookkeeping records are correctly analyzed, summarized and categorized by the accountant to maintain proper accounting records. One of the core reasons why businesses fail is due to mismatch or wrong entry in the books that end up giving birth to false financial statements, and will also cause trouble during the internal audit proceedings.
3.Transparency of Work Proceedings
It is to be noted that the business owners must make sure that they are aware of the work proceedings prevailing in the internal premises. Any illegal action found, or manipulation figured out will lead to trouble and might stop the internal audit process in between. This turns out to be more complicated if it gets reflected during the external audit process as it might even lead to the stage of company liquidation.
4.Keep the External Audit in Mind
The big picture is the external audit where an external auditor inspects the company’s proceedings. While carrying out the internal audit process in the company, it is to be kept in mind that the external audit will take place within a certain duration, and the company will be issued an audit report. Scoring a high number in the audit report turns out to be essentials as low audit score hampers the goodwill of the organization.
5.Set Specific Duration for Audit
To carry out an error-free internal audit process, the specific duration must be set according to the convenience of the business organization. You can set that monthly, quarterly or half-yearly. Keeping a continuous check helps to minimize internal errors and benefits the organization to a great extent. Your internal auditor can guide you accordingly and plan regarding the steps to be taken to achieve the organizational goal.
6.Implement the Audit Report Findings
It is vital that the findings of an internal audit must get implemented accordingly. To ease the process, you can have a word with your internal auditor and set deadlines for the respective tasks that need to be done. Also, make sure that the earlier tasks mentioned in the previous report are carried out accordingly. Following such continuity will help you to solve the present errors and cleans the pathway for external audit.
7.Pay Tax on Time
The next step that you need to keep in mind to ease the internal audit proceedings is to pay the tax on time. By doing this, you are clearing out your dues, and build a good reputation in the eyes of the government. Non-payment of tax will lead you in trouble, and at a later stage, adverse effects need to be bear by the organization.
8.Update the Records Whenever Necessary
Any change that needs to be done in the company records must be done instantly the moment it is known. Delaying it would result in inundation of the essential records, and will turn out to be a loophole during the internal audit process. To avoid such an error, it is recommended to have a look at the company records after a specified interval and update it if necessary.
9.Set a Deadline for Review Before the Audit
Before the audit process takes place, make sure that you have organized the complete documents, so that it will ease the audit process. An internal auditor turns out to be an experienced person having a comprehensive knowledge regarding the business processes. This enhances the flexibility for you to discuss the past, present, and plans and effective plan can be built accordingly.
Thus, we can see that if the above points are taken care of by the business entities, carrying out the internal process wouldn’t turn to be a complicated task. Maintaining such standards will not only help you to ease the internal audit proceedings, but will also set a clear way out for the external audit, and can help you achieve a good score in the audit report. To carry out the processes more professionally, it is recommended to take the help of professional audit experts who are experienced in carrying out the audit proceedings. At JAXA Chartered Accountants, we take care of our clients and help you carry out the audit process in a hassle-free way. To implement internal audit process in your company, do contact us today-we’d be glad to assist.