What is the role of Internal Audit in finance?

What is the role of Internal Audit in finance?

Internal Audit advances businesses to achieve their objectives by effectively evaluating and managing the risk factors and processes within an organisation. Once the risk factors are identified, the Internal Auditors focusses on managing the risks and processing them in the right way. Internal Audit is commenced in sync with the management to analyse and review the processes of an organisation by identifying areas where efficiencies and improvements can be progressed on strategic needs.

Internal Audit is functioning as a division to make sure that the prevailing internal control measures are effectively progressing adhering to the norms, procedures and strategies as put forward by the management.

What is the need for an Internal Audit in a company?

There is always a basic necessity in businesses to understand that the business is moving in the right track. Hence, the need of an internal audit arises as and when the business flourishes with time and in size and with its operations by ensuring proper compliance while expansion. The urge to call for an Internal Audit  is to review the facts of procedures on their operations of various divisions and report for non-compliance, inefficiency, identify critical control areas and hatch areas of improvement to recommend corrective measures.

Internal Audit is necessary as it deals with issues that are fundamentally important for the survival and prosperity of any business.

Internal Auditing is now a necessity as it has become a specialised service requiring not only expertise in accounting but also in organisational behaviour and in functional areas of management.

What is the Scope of Internal Auditing?

The Qualified Practice of Internal Auditing in its International Standards , the IIA states that ‘internal audit activity should evaluate and contribute to the improvement of risk management, control and governance processes using a systematic and disciplined approach”.

Internal Audit now lays emphasis as mentioned below:

1. Risk Management
2. Governance

1. Risk Management: The Internal Audit team will be assisting the business organisation to detect and evaluating substantial threats for risk which would contribute towards to enhance the risk management and control systems. The scrutinization will involve evaluating specific points as mentioned below:

Reliability and integrity of financial and operational information: The internal auditors shall be reviewing the reliability in sync with the finance team and the operations of the businesses to detect, measure and set out reports for such kind of extracted evidence. The process involves scrutinizing as mentioned below:

1. Whether the Financial reports are correct, dependable, apt and complete.
2. Whether there are any suitable operations to govern the record-keeping and reporting of the business.

Compliance with Laws, Regulations and Contracts: We as your Internal Auditors will be reviewing your ongoing systems and processes to make sure that your business is in compliance with UAE Laws. Businesses should have substantial impact with its ongoing policies, plans and procedures to have the reports of the processes to determine that the operations of your business have complied with the law of the region. Not adhering to the laws and policies in the UAE will attract huge penalties and serious consequences, hence 100% compliance is a must for the businesses which can be projected when proper systems are adopted.

Safeguarding of Assets: As your Internal Auditors, our internal audit team shall evaluate the systems and processes of safeguarding your assets to get and overview and evaluate the risk of losses from any unforeseen or unfortunate incidents like theft, fire, etc, improper activities and exposure to elements of nature.

Effectiveness and Efficiency of Operations: As your internal auditor we shall abide by the international standards we shall determine:

1. Whether the operating standards have been set by the management to determine cost-effective measures and its efficiency (it is not the responsibility of the internal auditor to set these standards);
2. Whether the established operating standards are understood by all the divisions and are being met as it should;
3. Whether if there is any discrepancy from operating standards they are set, progressed and communicated to those responsible for its correct action;
4. Whether correct action has been taken or not.

The accomplishment of Objectives and Goals for Operations or Programmes: As your Internal Auditors we will be evaluating the processes and development of programmes to determine if the end result or outcome have been constant with the ongoing objectives and policies of the business and whether the objectives and policies should be being taken forward as it had been decided.

Governance: Our Internal Audit team shall conduct an assessment and give proper references to improve the governance process for accomplishing the below-mentioned points:

1. To endorse precise integrity and morals within an organisation.
2. To make sure that the organisational performance supervision and accountability are progressive and effective.
3. To efficiently communicate the risk and control evidence to the concerned department of the organisation.
4. To manage the events and actions of communicating the information among the board members, external and internal auditors, and the management efficiently.

Nowadays Internal Audit has come up with modern days approach which covers vast areas to indulge in from reviewing of custodianship and safeguarding of assets, compliance with policies and reliability of accounting information.

It can thus be seen that the modern concept of internal auditing covers not only the traditional functions dealing with a review of custodianship and safeguarding of assets, compliance with policies and reliability of accounting information but it also lays emphasis in new areas like reviewing the economical and efficient use of resources and organisational performance. Once all the areas are assessed then, finally it will evaluate the entire governance process and suggest recommendations for the businesses enhancement.

If you are looking for Audit & Assurance Services in the UAE, then you are in the right place. Emirates Chartered Accountants Group caters highly qualified professional in the related field of work by providing a wide range of Audit and assurance services all over UAE – Dubai, Abu Dhabi, Ajman, Sharjah, Fujairah & Ras Al Khaimah.

• For Audit and Assurance Service in the UAE Contact Person: Mr. Pradeep Sai Email: sai@emiratesca.com Mobile: +971 – 556530001