Internal audit What is it and what is it for?

We'll show you in detail what an internal audit is , how to conduct one, and what its purpose is. Stay with us to read this interesting article.

What is an internal audit?

Companies in the world are continually investigating what improvements they could have, they need to know if there is any type of problem, and based on this, make a decision to reduce the risks of it. A possible problem faced by large companies is that, the larger they are, the more difficult it is to know and control their operation, be it operational or legal.

Therefore, companies must conduct internal audits , some more frequently than others. These are internal control and monitoring processes, carried out by the company itself, consisting of a series of measures and policies established to determine whether objectives are being met.

Companies then use internal audits as a system to protect their assets and interests, study compliance with their legal regulations, compliance with objectives, detect fraud, diversion of money, security problems, look for ways to carry out processes efficiently, etc.

Internal audits are carried out as often as required by the company itself, since it depends on the importance of carrying out this procedure and its performance, and to correct possible irregularities recorded in the last audit.

Usefulness and importance of conducting internal audits

Carrying out audits will allow the company's performance to be reviewed from various review points, which are the bodies and departments that comprise it. This is in order to meet the objectives effectively and correct errors, failures or irregularities that occur during the process.

Likewise, they allow management to make decisions based on the reports and recommendations obtained by the audits, and also review information that has been recorded in previous processes.

In addition, these processes allow the company to successfully and effectively meet its objectives since the audits allow the detection of the aforementioned flaws in the processes, but also detect fraud and possible loss of property, money, etc.

Here's a short video for you to watch if you don't have time to read the entire article or if you want even more detail:

Who performs the internal audit?

Internal audits are carried out by auditors, professionals with technical knowledge of the company, who are responsible for ensuring that the company's management uses resources efficiently, develop plans to avoid possible risks, increase profits and productivity, and generate ideas. and strategies to reduce costs.

The company must provide the auditor with all the accounting information necessary to carry out his work with transparency. These professionals take into account different points to consider such as the work environment, treatment of employees, growth of the company, its reputation, its possible influences on the environment and how this could affect its productivity, etc.

This auditor must have technical knowledge of the international standards and regulations necessary to carry out the audit process. It can also be a member of the company with the necessary professional capacity, who must have access to the financial records of the company.

Objectives of internal audits

With the growth of the volume of a company, the management begins to be unable to monitor its processes, so decision-making and management of these becomes very difficult. The functions and objectives of an internal audit are:

1. Examine and evaluate: determine the effectiveness of the application of accounting, financial and operational controls in the company. It also studies the fulfillment and performance of the objectives and the way in which they are carried out.
2. Requires compliance with the rules established by the company.
3. Identification: detects failures in the company, seeks to find and minimize risks and thus seek advice to improve the quality of operating processes.
4. Realization and review of inventories: this guarantees that the company does not have any type of loss of its assets, ensuring its control and registration.
5. Collaboration: it must promote the collaboration of each of the departments or bodies with the aim of increasing efficiency in management performance and decision-making.
6. Access to information: ensures that the company can enter information from its audit reports into the registry.
7. Accounting information: ensuring that it gives a truthful response to the economy of the company.
8. Audit report: if there are flaws and irregularities in the processes and performance of the objectives, the report will indicate it. This in order to make decisions that provide solutions to these problems of the company.

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