How Do Internal Audits Work
How Do Internal Audits Work?
Internal auditors perform a very specific job that is designed to make companies and organizations of all kinds perform better and maintain their regulatory compliance. Using an auditor assists an organization in defining areas where it could improve, while also giving it information it needs to accomplish its goals. This is done by the auditor showing the organization the best and most disciplined approach to these things. Businesses who periodically bring in a third party auditor like I.S. Partners, LLC, perform better, have improved risk management, better regulatory compliance, enhanced management control, and top quality governance processes.
Some of the Things Internal Auditors Do Are:
- Monitoring, analyzing, and assessing the risks and controls of the organization
- Reviewing information on the organization’s compliance with state and federal policies and laws, then confirming that information
- Making reassurances and recommendations to the organization or company’s owners or governing boards
Essentially, auditors gather information on how an organization or company is operating, and uses that information to show the organization where it is doing well and where it can improve. Using internal auditors ensures the company has the ability to survive in a competitive business environment, and continue to prosper. Many companies find the use of objective external auditors who have no personal connection to the organization is an excellent business investment, and use the auditors periodically to make sure every part of their organization is working as efficiently, effectively, securely, and in compliance as possible. Auditing on a periodic basis keeps a company and all of its employees at the top of its game.
Internal Audits vs. External Audits
An internal audit is not the same as an external audit. The objectives are different, as well as other processes. These are the differences, and demonstrate the enhanced effectiveness of an internal audit over an external one:
- An external auditor reports to shareholders who are outside the governing structure of an organization, while an internal auditor reports to those within the governing structure. More direct change and good can be done for the organization when those involved in running it get the information from the auditor.
- The objective of an external audit is to give reliability and credibility to the financial reports that go to shareholders. The objective of an internal audit is to educate management and employees about how they can operate the business better and more effectively. This allows a business to prosper, both financially and in employee satisfaction.
- External auditors have no responsibility to the organization other than reporting on financial findings. An internal auditor is also a consultant, and has the responsibility of advising management and the upper authorities in the company as to how to implement their suggestions to make the company thrive.
What Happens During an Internal Audit
When an internal auditor comes into a company or organization, they are there to analyze documents regarding the company’s goals, objectives, purpose, and performance, as well as observe how these things are being implemented. The auditor will often interview employees on their knowledge of company objectives, safety standards, compliance rules, and other such things. The auditor is there because someone in a high position at the company wants to make sure the company is operating at its best potential, and to discover areas where it can improve.
The auditor will discover these things, as well as consult with the person or board who hired them and discuss how their suggestions for improvement can best be implemented. The audit should not be an intimidating thing for employees at all, because the auditor is not there because anyone did anything wrong. The auditor is there to make sure things are going well, and to see if they can be made better. It really is a positive experience for a company to have an internal audit done on a regular basis.
Auditors will walk around, observe, take notes, review documents, and interview employees. Their work may take a day or many of them, depending on the scope of the audit and the size of the company, or department within the company, they are auditing. They are usually third party people who can view the operations of the company objectively, without the feeling of attachment to the company that may cloud the judgment of someone who works there. That is why it is always best to hire third party auditors.
If you want to make sure your company or organization is operating to the highest standards in every area, including newer areas like data security, you should hire a third party auditor like I.S. Partners, LLC on a regular basis. It is an excellent investment in your company’s future. Regular auditing will make sure your company is always in compliance, operating efficiently, and one step ahead of its competition. When everyone at the company is made aware of upcoming audits and are informed on the nature and purpose of them, they should go quite smoothly, and provide you with excellent information that will strengthen your company in every way, giving it the information and instructions it needs to be its best and to dominate the market. Feel free to give us a call at 215-675-1400 or request an internal audit quote