6 Essential Techniques Of Internal Audit Management
September 3 , 2021
Many companies hire internal auditors to manage their overall workflow operations. It is a permanent job designation that ensures the smooth running of a company’s financial operations. An internal auditor is responsible for checking the discrepancies in the financial statements and balance sheets. He helps enhance the profit and revenue of the business and prevents fraud and misembezzlement in the accounting system of the organisation.
An internal auditor enables the company to meet its desired objectives and make sure to abide by standard business practices. He restricts the company to work in compliance with the policies and procedures.
Internal auditing can be performed by utilising the in-house team resources or delegating the examination work to an outdoor third-party agency. It improves the quality and speed of performance of workflow operations and helps businesses achieve their goals. It depends on a company’s financial condition that requires auditing every week, month, or year.
Here are the six essential techniques of management internal audit for your organisation:
Setting A Clear And Definite Goal
It is a first and foremost idea for a company to establish a firm objective of implementing audits in an entire organisation. You should think for a purpose why you should need an audit program for your business. If you feel a doubt about the accounting system and want to keep a check and balance, you must go for an internal or statutory audit.
Examining Areas for Auditing
After setting up a goal, the next step is to examine the areas that need auditing. There can be some departments in your company that require assessment in financial records and transactions. You need to create a list of departments and review their areas of functionalities.
Identify the departments and check if they are operating under the regulatory policies and procedures defined by the GAAS and ISA UK. These departments may include complex manufacturing processes or simplified accounting practices.
Defining the Scope and Objective of Audit
It is the most crucial step of defining the broad scope and purpose of the audit to the company. The job of auditors is to highlight the positive aspects of internal or external auditing and describe the long-term benefits of a company. Auditing is an excellent practice to protect your company from financial discrepancies and shows a clear and transparent financial statement report.
Showing A Clarity And Accuracy Of Reports
Every company wants to have a clear and transparent financial report as a result of the auditing process. It gives them an idea of the condition of their company and forecasts the success or failure of a business in the future.
A business stands on its financial stability and collapses if any misembezzlement happens in the financial record or transaction. The balance sheet and income statement are powerful tools to reveal an organization’s present and future status.
Implementing the 5C’S of Auditing
These five C’s of auditing are based on the company’s accurate findings and information. They provide a detailed assessment of records and offer valuable recommendations and action plans to improve the workflow monitoring system of a business. These five C’s include the condition, criteria, cause, consequence, and corrective action.
The condition describes the identification of a specific problem and finds its adequate solution. Criteria is a set of standards that needs to be fulfilled as per the company policy. Cause defines the reason for auditing and finds ways to resolve the issues. The consequence indicates the negative impact of the findings on the company and results in a bad reputation in the market. Lastly, the corrective action plan provides the practical measures to report the findings and improve the operational efficiency of an organisation.
Using The Modern Technology In Audit
The traditional auditing procedure is daunting and time-consuming to auditors. It takes a lot of time to find and gather valid proof of evidence. Auditors have to evaluate the minute details from petty cash vouchers to equalising financial statements. The debit and credit balance amount must be equal.
With the rapid advancement of technology, the process of auditing has become a lot more simplified. Now auditors do not need to waste their precious time collecting the evidence, and they use the latest audit apps to execute their investigation. It hardly takes them few hours to complete their audit, and auditors find comfort in getting rid of the hassles of following the manual auditing practices.
Hence, in a nutshell, those mentioned above are remarkable techniques you need to follow for internal audit management. It describes the valuable points to consider and implement for companies to improve their depth audit process and enhance their internal workflow operations. There is a growing scope of internal auditors in increasing the profit and revenue for organisations. Auditors use the modern apps to carry out their audits in a matter of few minutes.
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