It is estimated that businesses all over the world lose millions of dollars through fraud alone committed by employees. It is often mistakenly believed that to keep a track of frauds and internal thefts you need to have a full-fledged auditing department. However, this is not the case and if you even have a small, but dedicated team, you can be assured of amazing results.Internal audit is an important, but independent, objective that is aimed at adding value and improve the quality of any business operations. Internal audit evaluates the functioning of an organisation and tries to bring about an improvement in its functioning, wherever possible. The areas of improvement which internal audit looks at control, risk management, governance, and overall efficiency. The business or organisation employs professionals who are designated as internal auditors to perform this task.

The scope of internal auditing in an organisation is quite wide and may cover parameters such as the efficiency of operations, safeguard of assets, investigation of frauds and thefts, dependable financial reporting, and compliance of policies, laws, and regulations. As internal auditors are not accountable for the company activities, they suitably advise the management and/or the Board of Directors on the correct methods and procedures for execution of the work.

Auditing is a method of appraising the effectuality of an organisation’s internal controls. An effective system of internal control is essential if a company has to meet its business objectives, apart from preventing fraud and misappropriation, and exercising a check on expenditure. Even though internal audit is conducted part-time by employees who are assigned other duties in normal times, there should exist a formal internal audit policy. Checking policies and procedures regularly, on an ongoing basis ensures that the organisation is not susceptible to fraud, misappropriation, or other losses.

Another aspect of the organisation that audit looks into is operation audit which examines the practices and efficiency of the organisation. It is a well-known thing that ineffective and inefficient operations decrease the profitability and add to the overheads of the organisation. Internal audit checks this and also finds if the company is following policies correctly and complying with all mandatory government regulations, lest it be subject to fines or other legal actions.

Remember that it is important for an organisation to have an effective audit system to meet it corporate and business objectives. It is essential for a business or organisation to have complete internal control over its activities and this can be possible only if you have a strong audit system. An efficient internal audit system can ensure monitoring, supervision, prevention and detection of frauds and misappropriations, and also propose methods for improvement of systems and procedures to improve productivity and increase profit.

If you are running a small company or organisation, it is unlikely that the company can afford to create a comprehensive internal audit department, but you can surely create an effective system for monitoring its employees. With this simple, yet efficient, system you can maintain operative and financial control of the organisation. One of the important aspects of auditing should be made known to the employees that internal audit helps the company’s growth.

Entrepreneurial Learning

The scope of internal auditing in an organisation is quite wide and may cover parameters such as the efficiency of operations, safeguard of assets, investigation of frauds and thefts, dependable financial reporting, and compliance of policies, laws, and regulations. As internal auditors are not accountable for the company activities, they suitably advise the management and/or the Board of Directors on the correct methods and procedures for execution of the work.

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