<h1> What is Internal Audit </h1>

“Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It assists an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes” [ Source – Internal Audit book by BOMBAY CHARTERED ACCOUNTANTS SOCIETY]

We all are well versed in the current business scenario which has been affected due to the pandemic. This has resulted in changes in the roles and responsibilities of an internal auditor. Before the pandemic, the auditors focused on finding the gaps in the accounting procedures of the companies and evaluating the risks with regard to the financial position of the company. The functions performed by the internal auditors were limited to the scope defined by them.

After the pandemic, auditors have a dynamic role to play which will help the business to grow in the correct manner. The scope of auditors will change and businesses will see internal auditors business consultants instead of traditional auditors. The internal auditors will help companies in drafting their procedures and provide guidance as to how the business can function post this pandemic. There will be a focus on the areas which have been affected majorly due to this pandemic and new reforms are being drafted by the internal auditors which will result in the smooth functioning of the business.

<h3>FUNCTIONS OF INTERNAL AUDIT </h3>

<b><li>Monitoring of Internal Control-</li></b> The internal auditor will have to ensure whether internal controls have been defined and whether these are adequate. Further, the auditor has to monitor the functioning of the internal controls to ensure effectiveness and check whether the employees are working as per the roles assigned to them and whether there are proper approvals taken of the senior-level employees.

<b><li>Examination of Financial & Operating information–</li></b> The internal auditor must assure that all the documents are maintained properly and there is transparency in managing accounts. The areas where financial risk is higher should be evaluated more frequently and thoroughly.

<b><li>Risk Management–</b></li> This is one of the important functions of the internal auditor, as the internal auditor has to analyze the financial and operational risks applicable to various departments and give the recommendations to mitigate the risks as per his/her knowledge and experience.

<b><li>Review of Operating activities–</b></li> The internal auditor must focus on the operating activities along with financial activities. Risks occurring in the operational activities must be analyzed and minimized as they are routine activities conducted by the businesses.

<b><li>Governance–</b></li> The internal auditor must assure that the company is functioning in accordance with corporate governance and ERM frameworks defined and there is a defined responsibility among Senior Management to ensure implementation. If there are any discrepancies, they must be recorded and presented to the Management timely.

<b><li>Review of Compliance with Laws & Regulations–</b></li> This is the most important function of the internal auditor where he has to verify that the business processes are functioning as per the norms set by the government and all the laws which are applicable to the companies are being followed.

<b><li>Audit reports–</b></li> The audit reports made by the internal auditor must be unbiased, accurate, and the reports should be made as per the given timelines.

<b><li>Analysis–</li></b> The analysis & recommendations given by the internal auditor must result in better functioning of the business and the gaps which were found earlier must be minimized or closed on a timely basis.

<h3>How Internal Auditors Help You </h3>

The process of conducting the internal audit is dynamic as it keeps changing from business to business. However, the knowledge and experience of the internal auditors play an important role as they have to keep themselves updated with new rules and regulations set by the government and with the changes in the business environment and changes to auditing standards. With changing times, internal auditors are focusing on risk-based internal audits which focus on the processes and risks which have a greater impact on the business. This enables internal auditors to define the scope of audit in a better way and ultimately identify areas of improvement. 

RiskPro offers Risk Based Internal Audit services and Internal Audit & IFC Management Software. For more details on our services or to schedule an online demo of the software, please connect with us at info@riskpro.in.