Internal audit is necessary because it provides independent assurance that an organization’s risk management, governance, and internal control processes are operating effectively.
Internal audit is a regular activity undertaken by the company to assess the employee’s and management’s performance based on the determined business processes and SOP’s. This internal audit process ensures every involved personnel in the company works in accordance with the established standards. Internal audits are conducted by competent both internal and external parties.
Some steps to conduct an internal audit is required, such as:
- Planning
At this stage the auditor sets the objectives to be reviewed, considers the potential risks and resources involved in the audit process, then determines the most appropriate audit program with the company and ensures top management approval to perform the audit process.
- Audit Implementation and Testing Information
In the implementation phase, the auditor analyzes, collects various information and verifies the truth of the information obtained. The information testing process shall be supervised by the appointed auditor to have objective assessment and examination objectives to be trusted.
- Submission of Audit Results
Reporting test results to the related party. The report should be objective, clear, concise, constructive and timely. In the report, the Auditor should also include a range of possible developmental recommendations.
- Follow up audit results
Follow-up audit report is required to ensure the recommendation and corrective action taken are beneficial to the company. Internal auditors help the organization to succeed. through a combination of assurance and consulting. The assurance part involves telling managers and governors how well the systems and processes designed to keep the organization on the track are working.
An internal audit is taken to review the potential risks towards the business and review the business capability in managing risks effectively. The audit results usually the recommendation for improvement in all departments.
