3 reasons why an internal audit is important to a business

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An internal audit helps an organisation accomplish its objectives through a disciplined approach of evaluating and improving the effectiveness of risk management, control and government processes. It’s an independent activity designed to add value to the organisation’s operations. Independence is essential throughout the internal audit function to ensure that approved audit plans and tasks are evaluated and assessed appropriately. 

An internal audit is important to a business because it provides the opportunity to:

1. Get involved early and identify risks 

Early involvement of an internal audit can help manage business risks through: 

  • Identification (emerging versus current) 
  • Assessment (level of risk and impacts) 
  • Review of control practices (are there adequate measures in place?)

2. Establish processes and make necessary adjustments

Periodic reviews are required to ensure that any risks identified are managed accordingly with aligned assurance activities. They need to remain relevant and valid, therefore processes to monitor these objectives (especially timelines and priorities) need to be adjusted. In a changing work environment, there is a need to continuously check and align these touch points to process. The internal audit is an extra layer of comfort that makes certain that these processes are maintained and more importantly, add value.

3. Be efficient by using a central framework 

Internal audits may be conducted formally or simply act as health checks with smaller activities. It’s important that these are documented in a practical way. This will help deliver them in a timely and efficient manner as well as guaranteeing consistency across all processes and activities. 

Using a central reporting framework can cater for consistent: 

  • Risk and rating scales 
  • Timelines based on rating scales 
  • New risk reporting
  • Documentation of outputs 
  • Scoping of activities 

The central framework may be in the form of an Internal Audit system that is appropriate for the size of your business, and one that can be easily scaled. Keeping abreast of framework inputs and developing short reporting cycles will ensure that any issues are dealt with in a timely manner.  This will help maintain internal compliance in the long term and enable a culture of continuous improvement.  

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