How to Get the Most Out of an Internal Audit

Dec 2019

There comes a time when your company will require assistance in alleviating the present its present condition and what better solution than to use an Internal Audit. Every businessperson knows that conducting periodic audits of a company is very important for maintaining the health of the company.

Let’s fully understand what an Internal Audit is and how can it be beneficial for your company.

Internal Audit: Meaning

Internal audit is an activity which by which the management of a company is assured that the company is still working upon the same mission and vision, and all the processes are operating effectively. Not only this, but the activity adds value to the company by helping the management improve the organization's operations.

These audits are conducted within the company by either an individual or a department depending upon the financial stability and requirement of the company. A periodic audit of the company is essential as it helps to understand the pitfalls in the workings of the company and also provides assistance in addressing it.

How to use Internal Audit to the fullest?

An internal audit will allow you to properly understand the present condition of the company and then strategies for the future accordingly. Here are the top reasons as to why an internal audit is so essential for a company:

1. Provides Insights

The internal auditor mostly utilizes the reports prepared by the accountant of the company. The auditor will perform an in-depth analysis and will determine future trends in the sector. These insights will prove very handy for increasing the efficiency and effectiveness of the company.

An audit will help us understand the present scenario of the business and open you new investment ventures for the company.

2. Helps in External Audit

An internal audit report is beneficial in case of an external audit. The main difference between them is that in an internal audit an individual or a department of the company will perform the said audit, but in the case of an external audit, the audit will be conducted by a third party. By implementing an internal audit, the work to be done by an external auditor is decreased. This is because there are overlaps of an internal audit with the work done by an external auditor.

To know more about the difference between an internal audit and an external audit, Please read our blog Difference between Internal and External Audit.

3. Assess Any Future Risk

When performing an audit, the management will be in a better position to understand future trends and what changes do they need to make in the company, in the long run, to stay relevant. By predicting the future, it will be possible to increase the revenue of the company and ditch any process which will be deemed irrelevant in the long run. Having a periodic audit of the internal workings of the company will allow the management to focus on the company.

4. Check for Compliance

Internal audit will ensure that the company follows the rules and regulations as stipulated by the concerned authorities. This checking will not only help the company avoid fines but will also increase the morale of the investors. It will also help in increasing the trust of the potential investors and smooth the way for requiring any future licenses or permits.

5. Proper Control

After performing an audit, the management will have an understanding of the deviation and the reason for the variation. To control the situation, the administration will be able to put tabs on the process and reduce these deviations. One of the aims of conducting an internal audit is to increase the productivity of the company with judiciously utilizing the resources at the disposal of the company. With periodic audits in place, the management of the company can rest assured that there is no loss occurring to the company.

The points above are some of the most important reasons for having an internal audit in a company and keeping these points in mind will allow the management to utilize internal audit to the fullest.

Over time, companies require better and more complex audits so that they can understand the present condition of the company. Thus, it is always recommended that you take the help of an Accounting and Auditing Firm. If you are looking for Audit services, you can take the assistance of JAXA Chartered Accountants. It will help your company to take control of your finances and use the resources judiciously. For details on our offerings do, contact us – we’d be happy to help.