To ensure sanity and compliance with the best accounting practices and to check fraud, internal audit is essential to keep the organization’s resources away from people that may want to take advantage of the lack of internal checking system in the organization.
Internal Audit Objectives
However, internal audit must be efficient before it can deliver its primary objectives. In order for an internal audit to be effective, the following conditions must be met by the internal audit services, or it will be an effort worth nothing.
Taking responsibility for Internal Auditing
The audit unit must be ready to take total responsibility for decisions and actions that are pertaining to autonomy and objectivity of the internal audit duty. It means internal audit line must report directly to the audit committee.
Access and accept Internal Audit Charter
The internal audit charter is a legitimate document that clarifies the internal audit’s action, purpose, authority as well as responsibility. The internal audit charter affirms the place of internal audit in an organization and it defines the scope of an internal audit. Adhering to internal audit charter will ensure that internal audit has a bite in every organization.
Promoting formal and informal communication with Internal Audit head
To make sure that an effective internal audit is in place, it is advisable that the unit is not placed under a department that comes under the scrutiny of internal audit, there will be a conflict of opinion should such a thing happen. Consulting internal audit CPA firm can help place the internal audit in the right department to avoid conflicts of opinion.
Internal audit must have sufficient resources if it must function to an optimal level. Resources must cover both proficiency and numbers of staff. The head of internal audit must be efficient with all the required skills and experience and the staff must be up and doing in their tasks. It is recommended that regular training should be arranged to upgrade staff members of the unit.
In-house and external monitor of Internal Audit duties
Monitoring the internal audit function is the first point. In-house and external monitoring may be needed to check the unit from erring. The head of internal audit must ensure to put in place quality assurance programs that cover all areas of internal audit.
Internal audit is the best way to make sure that accounting staff and others that have access to company’s money and assets are not using them for personal advantage, therefore, an effective internal audit is the bedrock of good internal check and balances.