Internal Audit in India is one of the major areas which aid the organization in enhancing business performance by identifying the growth areas with greater scope for improvement. The process of Internal audit helps in reviewing the existing systems and their effectiveness by benchmarking the audit processes and procedures against the best industry practices to meet the global standards.
What is Internal Audit?
A Secretarial Audit in Delhi is a department or an organization of people within a company that is tasked with providing unbiased, independent reviews of systems, business organizations, and processes. The role of Internal Audit is to provide senior leaders and governing bodies of an organization an objective source of information regarding the organization’s risks, control environment, operational effectiveness, and compliance with applicable laws and regulations.
As Internal Audit reports to senior leadership, it is only appropriate that its activities are directed by the CEO or Board of Directors through its Audit Committee. Members of Internal Audit must be independent of internal politics and unbiased to provide leadership with objective sources of information. Under the direction of the Audit Committee, Internal Audit works with management to systematically review control activities over critical systems and processes.
The reviews performed by Internal Audit are often called internal audits. An internal audit may be used to assess an organization’s performance or the execution of a process against a number of standards, policies, metrics, or regulations. These audits may include examining a business’s internal controls around corporate governance, accounting, financial reporting, and IT general controls. Internal audits may also entail evaluating the effectiveness/efficiency of critical business operations such as supply chain management. Those individuals working in Internal Audit are called internal auditors. Internal auditors may cover all areas of an organization or specialize based on their skill-sets.
The aim of internal audits is to identify weaknesses within the organization's processes and control the environment internally so that they can be fixed as quickly as possible to prevent harm to the organization or its stakeholders. Accordingly, the internal audit plan for an organization should be driven by a risk basis or, in other words, be designed to examine those areas that present the greatest risk to the company. The internal audit plan should also include a component of the strategic needs of an organization.
Internal vs External Audits: How are They Different?
There is a little bit of confusion about what the difference is between internal and external audits. From my experience, whenever the word “audit” is appended to a phrase or a subject, it instantly becomes boring. Try it Company Secretarial Audit sometime —It is great for killing small talk during the holidays.
Whenever an audit is mentioned, we, or at least most of us, switch into Charlie Brown school mode—our eyes glaze over and the speaker's voice turns into a stream of mumbles. As a result, most people in any organization view them as synonyms for the same thing—audit. Despite this popular perception, internal and external audits are not the same thing.
I think the simplest way to explain the difference between internal and external audits is to compare the who, what, and why's associated with the two types of audits. Some of the key differences are highlighted in the following table.