What Is Internal Audit?

Internal Auditing is an independent and objective assurance and consulting activity that aims to improve and add value to an organization’s operations.

Internal audit helps the organization achieve its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of its risk management, control, and governance processes.

Mission of Internal Audit

Protecting and enhancing organizational value by providing risk-based, objective assurance, advice, and insights.

Main Principles of Internal Audit

• They act honestly and virtuously.
• Demonstrates competence and professional care.
• It is objective and not influenced (independent)
• It is compatible with the organization’s strategies, objectives, and risks.
• It is conveniently located and has sufficient resources.
• It is based on quality and continuous development.
• Communicates effectively.
• Provides risk-based assurance.
• He is insightful, proactive, and future-oriented.
• It promotes institutional development.

Why Use Internal Audit?

1. Responsibility and Accountability: One reason for conducting internal audits is the need to investigate the activities of business employees and the degree of compliance with senior management policies.
2. Agency Theory: In this context, an internal audit ensures that the business owners are convinced by carrying out the most important controls that can eliminate the doubts of the business owners about the irregularities that may arise during the performance of the responsibilities of the manager who acts as an agent.
3. Consultancy and Assistance to Management: Internal auditors, who are experts in their profession, can not only reveal errors and fraud in the business but also provide consultancy and training services to managers to prevent similar problems in the future.
4. Need for Savings: Revealing and correcting financial losses can sometimes even cover the business’s annual cost of the internal audit unit.
5. Assurance: It provides sufficient (reasonable) assurance that the enterprise’s risk management, internal control system, and processes operate effectively, the accuracy and completeness of the information produced, assets are protected, and activities are carried out effectively, economically, efficiently, and in accordance with business policies.
6. Detecting fraudulent transactions: One of the most important areas of internal auditing is to detect frauds that business managers or employees may commit.