Internal Auditing: 10 duties of an Internal Auditor
Do you want to be an internal auditor? Is it your dream job, or do you want to change your career today and become an internal auditor? If so or not, it will be vital for you to understand the duties of an internal auditor. To begin with, internal auditors form an integral part of an organization. Their success in the auditing profession reflects the success of an organization.
Suppose you choose to walk along this profession. In that case, your role in an organization will be down to reviewing risk management and performing some controls and governance in an organization. Some of the other roles include:
Duties and Responsibilities of an Internal Auditor
Beyond performing audits, other Internal Auditor responsibilities include:
Examining the Process of Management of Risk
Role
- To identify, assess, and evaluate risks that could impact the organization.
Responsibilities
- Conduct comprehensive risk assessments to identify potential risks.
- Evaluate the effectiveness of existing risk management strategies.
- Provide recommendations to mitigate identified risks and improve risk management processes.
Example
- Performing an enterprise-wide risk assessment to highlight areas of high risk and developing strategies to manage those risks effectively.
Many organization faces risks. Success in an organization is defined by how effectively employees are able to manage the risk. An internal auditor is expected to perform an annual risk assessment of vital operational and management areas within an organization. The review will provide a picture of the way in which resources are used within an organization. Moreover, the organization will be able to identify if the resources being used are in compliance with the organizational procedures and policies.
Enhance and Advance Operations in an Organisation
Role
- To support management by providing expert advice and analysis.
Responsibilities
- Offer insights on risk management, internal controls, and governance.
- Provide data-driven analysis to inform decision-making.
- Advise management on strategic initiatives and operational improvements.
Example
- Advising on the implementation of a new IT system, ensuring that it aligns with organizational goals and has adequate controls in place.
While conducting the audit process, internal auditors can investigate the organization day to day-to-day operations. They can compare if the operations in an organization are in accordance with the organization’s objectives. While writing internal auditors’ reports, they may advise the management on which operational methodologies to bank on for success. In an organization, an internal auditor may enhance organization values by reporting to the management on the progress of managing risks. By doing so, they will engage in educating the organizational staff and enhancing their development.
Gives Advice Analysis and Information to management
Role
- To ensure the protection and proper management of organizational assets.
Responsibilities
- Assess the controls in place to safeguard assets.
- Conduct audits to ensure that assets are recorded accurately and protected from theft, loss, or misuse.
- Recommend measures to enhance asset security.
Example
- Auditing the physical security controls of a warehouse to ensure inventory is protected against theft or damage.
Internal auditors add value to the management team. While conducting Internal controls, they provide advice to workers who are responsible for faults in the organization. At the same time, the Audit report is forwarded to the audit committee and the organization’s governing body. The committee can directly apply the auditor’s advice and improve operations within the organization.
Provide Security for the organization’s assets.
Role
- To ensure that the organization’s resources, including human capital, are effectively managed.
Responsibilities
- Evaluate HR policies and procedures to ensure they align with organizational goals.
- Review staffing levels and resource allocation to optimize performance.
- Recommend improvements in resource management.
Example
- Assessing the efficiency of the recruitment process and suggesting ways to attract and retain top talent more effectively.
Internal auditors protect the organization’s assets against theft and burglary. They are tasked with the responsibility of evaluating security information and some associated risks that may affect the organization. Auditors detect instances of fraud and give a report to the management. They are tasked with the duties of ensuring that audit programs and methodologies are capable of detecting fraud. At times the internal auditors may aid the management in investigating cases of fraud and provide Security for the organizational asset.
Provide staffing and management of resources.
Role
- To ensure that the organization’s resources, including human capital, are effectively managed.
Responsibilities
- Evaluate HR policies and procedures to ensure they align with organizational goals.
- Review staffing levels and resource allocation to optimize performance.
- Recommend improvements in resource management.
Example
- Assessing the efficiency of the recruitment process and suggesting ways to attract and retain top talent more effectively.
Internal auditors are given organizational resources to adequately discharge their duties. The management will require them to adequately take care of the organizational resources. Internal auditors are provided with unrestricted access to organization records, information, and assets. Most of the time, internal auditors sample staff data, perform some tests on this data and later document some conclusions and findings in their report. This enables the auditors to adequately provide staffing services to the organization.
They Provide Objective Assurance to Management and other Shareholders
Role
- To offer unbiased evaluations and assurance on various aspects of the organization.
Responsibilities
- Conduct independent audits and assessments.
- Provide objective findings and recommendations.
- Report to management and shareholders on the effectiveness of controls and risk management.
Example
- Presenting an objective assessment of the internal controls over financial reporting to the audit committee.
The primary role of an internal auditor is to provide a confirmation to the organization body on the adequacy of the control system. Moreover, they provide reliability in both internal and external auditing. This will primarilyprovide support to the achievement of co-operating objectives. In some cases, where the business may face an interruption or a possible closure for any reason, internal auditors may provide assurance on the readiness of the company to tackle such issues; the external and internal reports will vastly boost the objectives of management and shareholders.
Help in the improvement of internal controls
Role
- To enhance the effectiveness of internal controls within the organization.
Responsibilities
- Evaluate the design and operational effectiveness of internal controls.
- Identify weaknesses or gaps in controls and recommend improvements.
- Monitor the implementation of control improvements.
Example
- Conducting a review of the internal controls over cash handling processes and recommending more robust controls to prevent fraud.
Internal auditor’s knowledge of risk management aids them to serve as a consultant. They will provide advice on matters of internal control, and they may catalyze project success. A large majority of members in an organization are part of the organization’s internal control system. Be it that you are working in the mailroom or the boardroom, each day, you serve a purpose in the organization’s schedule. An internal auditor, while conducting an audit, may evaluate controls in the organization and contribute to the organization’s success.
Providing more transparency in auditing
Role
- To ensure that the auditing process is transparent and understandable to all stakeholders.
Responsibilities
- Maintain clear and open communication with stakeholders throughout the audit process.
- Document audit procedures and findings comprehensively.
- Ensure transparency in the reporting of audit results.
Example
- Providing detailed audit reports that clearly outline the audit scope, methodology, findings, and recommendations.
Internal auditors create a detailed report of the entire auditing cycle. This ensures that they provide a thorough insight into the vital matters in an organization. Their practice brings an open and democratic culture that can be enumerated by fellow employers and even organizations in the same industry. Organization stakeholders may be pleased by the internal auditor being more proactive and ready to step up in salient matters in an organization. In achieving the objective of the organization, transparency is vital as it boils down to the policies and procedures of the body.
Reporting of audit findings
Role
- To communicate audit findings and recommendations to relevant stakeholders effectively.
Responsibilities
- Prepare detailed and accurate audit reports.
- Present findings to senior management and the audit committee.
- Follow up on the implementation of audit recommendations and report on progress.
Example
- Reporting the results of a compliance audit to the board of directors and providing actionable recommendations to address any issues identified.
One of the core duties of an internal auditor is to analyze, summarize and combine the findings of an audit. This is the climax process of all auditing cycles. The board of directors and the audit committee depend on the results for gauging the financial position of the organization. In the report, the auditor must indicate whether the statement provided mirrors the state of the company affairs. While reporting, the auditor can provide a qualified report opinion, a disclaimer or an adverse opinion. The nature of the opinion given may depend on the independence of the auditor.
Checking on the compliance rate of the organization to the relevant laws and statutes
Role
- To ensure the organization’s compliance with applicable laws, regulations, and internal policies.
Responsibilities
- Conduct audits to assess compliance with legal and regulatory requirements.
- Review internal policies and procedures for adherence to laws and regulations.
- Identify areas of non-compliance and recommend corrective actions.
Example
- Auditing the organization’s compliance with data protection regulations, such as GDPR, to ensure appropriate handling of personal data.
It is in the best interest of the company for internal auditors to operate according to government and international professional standards. Thus, internal auditors will uphold the professional code of ethics while examining the audit reports. They will also consider whether the new policies that might have been implemented are in line with government laws and other international professional auditing bodies.
In conclusion, a firm can only adequately perform its operation by conducting a proper audit examination. In fact, firms need auditing more than ever with the advancement of technology. You must consult with a professional CPA firm doing Internal Audits.
FAQ: Roles and Responsibilities of Internal Auditors
- What is the role of internal auditors in examining the process of management of risk?
Internal auditors identify, assess, and evaluate risks that could impact the organization. They conduct risk assessments, assess risk management strategies, and provide recommendations to improve risk management processes.
- How do internal auditors enhance and advance operations in an organization?
Internal auditors analyze operational processes, identify areas for improvement, and provide recommendations to streamline operations, reduce costs, and enhance productivity. They implement best practices to advance organizational performance.
- In what ways do internal auditors give advice, analysis, and information to management?
Internal auditors support management by providing expert advice and analysis on risk management, internal controls, and governance. They offer data-driven insights to inform decision-making and advise on strategic initiatives and operational improvements.
- How do internal auditors provide Security for the organization’s assets?
Internal auditors assess the controls in place to safeguard assets, conduct audits to ensure assets are recorded accurately and protected from theft, loss, or misuse, and recommend measures to enhance asset security.
- What is the role of internal auditors in providing staffing and management of resources?
Internal auditors evaluate HR policies and procedures, review staffing levels and resource allocation, and recommend improvements in resource management to ensure that the organization’s resources, including human capital, are effectively managed.
- How do internal auditors provide objective assurance to management and other stakeholders?
Internal auditors conduct independent audits and assessments, provide unbiased findings and recommendations, and report to management and shareholders on the effectiveness of controls and risk management.
- In what ways do internal auditors help in the improvement of internal controls?
Internal auditors evaluate the design and operational effectiveness of internal controls, identify weaknesses or gaps in controls, recommend improvements, and monitor their implementation.
- How do internal auditors provide more transparency in auditing?
Internal auditors ensure transparency by maintaining clear and open communication with stakeholders, documenting audit procedures and findings comprehensively, and providing detailed audit reports that outline the audit scope, methodology, findings, and recommendations.
- What is involved in the reporting of audit findings by internal auditors?
Internal auditors prepare detailed and accurate audit reports, present findings to senior management and the audit committee, and follow up on the implementation of audit recommendations, reporting on progress.
- How do internal auditors check on the compliance rate of the organization with relevant laws and statutes?
Internal auditors conduct compliance audits to assess adherence to legal and regulatory requirements, review internal policies and procedures for compliance, identify areas of non-compliance, and recommend corrective actions.
Conclusion
Internal auditors are indispensable in ensuring that an organization operates effectively, efficiently, and in compliance with relevant laws and regulations. Their diverse roles, from risk management and operational enhancement to compliance assurance and transparency, help safeguard the organization’s assets and provide valuable insights and recommendations to management and shareholders. By fulfilling these duties, internal auditors contribute significantly to the continuous improvement and success of the organization.