Internal auditing provides an accurate and deep intuitive understanding of the functions of a company, with an objective evaluation of the company's financial condition. Qualified and experienced professionals carry out the internal audit services by Jaxa Auditors in Dubai, and these services are based on a comprehensive, validated methodology.
Internal Audit delivers reliable proof that the company's financial statements are fair representatives of its current financial situation. Moreover, an internal Audit gives the company credibility and confidence in dealing with clients, investors, shareholders, and customers.
Jaxa Auditors will communicate with clients throughout the audit process to address significant issues, reduce the risk of fraud, and ensure that deadlines for submission are met.
- What is Internal Audit in a Company?
- Advantages and Needs of Internal Audit Services
- Internal Audit Process
- Types of Internal Audit
- Internal Audit Planning Checklist
- Who Needs Internal Audit
What is Internal Audit in a Company?
An internal Audit can be an organization of people or a department within a company that provides independent and unbiased reviews of processes and systems of business organizations. Internal Audit provides the company managers and organization governing bodies with an objective source of information about the risks, operational effectiveness and weaknesses, control environment, and compliance with the existing and applicable laws and regulations.
Advantages and Needs of Internal Audit Services
1. Provides objective insight
Internal Audit provides accurate insight into an organisation's policies, procedures, and culture based on factual evidence rather than personal opinion.
2. Helps improve the efficiency and effectiveness of company operations.
Internal Audit reviews your policies and procedures for assurance that your policies and practices are appropriately followed. You can identify control recommendations to improve company processes.
3. Assess Organizational Controls
Internal auditing is advantageous because it improves the organization's control environment by evaluating efficiency and operating effectiveness.
4. Identify Risks and Protect Assets
Internal Audit helps the management and stakeholders by identifying risks through systematic assessment, which assists in identifying any gaps in the environment and allowing corrective measures to take place.
5. Ensure Compliance with Rules and Regulations
Regular internal audits ensure compliance with all the relevant laws and regulations. You'll have peace of mind knowing that you are ready for the following external Audit.
Additionally, you gain the client's trust and avoid paying hefty fines for non-compliance.
Internal Audit Process
Internal Audit is done through a five-phase process that includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans.
The selection of audit activities is based on a potential risk approach. A meeting shall be held between the internal auditor and the management to discuss any obstructions and risks and eventually meet objectives.
Planning starts from identifying the objective and scope of the Audit to bring out steps in meeting the objectives. Management is also included in this phase, and the meeting details are recorded in the planning and scoping memo.
The fieldwork phase is the actual performance of the steps identified in the planning process. Some steps may include conducting interviews and surveys and reviewing laws, policies, and procedures accepted and prescribed to be most effective.
As the fieldwork concludes, a meeting with the management will again be held to discuss the results, including specific findings. Other subjects of the meeting also include other observations and recommendations. The auditor will ask the management to respond to the report with a corrective action plan with an implementation timeline.
5. Follow Up
A follow-up will be made for assurance to ensure that the corrective action plans are properly implemented. Action plans that are non progressing are to be reported annually to the company executives.
Types of Internal Audit
1. Compliance Audit
Compliance Audit examines adherence and conformity to a particular process, system, plans, procedures, laws, contracts, regulations, or other requirements. The conduct of the area subject to Audit is governed.
2. Operational Audit
Operational Audit focuses on the internal controls of the company's processes, systems, and procedures. Its purpose is to improve productivity and operation effectivity and effectiveness.
3. Financial Audit
Financial Audit objectively examines and evaluates the organization's financial statements to ensure that the company's financial records are accurate and true representations of the transactions.
4. Information Technology Audit
Information Technology Audit is an examination of the controls by the management on IT applications, databases, operating systems, and the infrastructure. These exclusive reviews are focused mainly on IT.
Internal Audit Planning Checklist
1. Introductory Audit Planning
Internal audit planning should make the group understand why certain projects were subject to Audit.
2. Preparing document request list
Setting up an audit requires getting documents about how the procedure should be undertaken. Documents should include:
- all approaches, organization graphs, and methodology reports
- key reports on proficiency, adequacy, and procedure achievement
- access to enter utilized applications
- description of all information fields
3. Risk and subject matter proficiency
Using the internal organization data is beneficial in evaluating the working adequacy of the procedures' control, and to guarantee that the procedures are accurately structured.
4. Getting prepared for planning meeting
The pre-arranged planning meeting will allow you to understand the objectives and target of the procedure.
5. Setting up the audit program
Placing the procedure details in a story or flowchart will make deciding on audit methods a lot simpler.
Who Needs Internal Audit
All companies operating in the mainland UAE such as banks, investors, government authorities etc., need an internal Audit. They are required by authorities to have their financial accounts audited, and these companies must keep their financial records for at least five years. Companies in the free zones do not get audited because they are not required to submit their audit report. It should be noted; however, that audit reports may be required for immigration purposes.
What is the difference between internal and external audits?
Internal Audit is a discretionary function that is performed by people working within the organization as employees. External Audit is a mandatory function performed by 3rd party team appointed from outside the organization.
What is the role of internal Audit?
The role of an internal audit is to review the processes and systems of a company and provide assurance that its internal control processes and risk management governance are objectively operating.
What are the stages of internal Audit?
Internal Audit has five stages: Selection, Planning, Conducting, Fieldwork, Reporting the results and following up on corrective action plans.
What are the tips for a successful internal audit?
Internal auditors in Dubai, to become successful, should possess vision and instinct, be able to see the big picture, be good team players, and have decision-making abilities.