Internal audit process is executed in every company irrespective of its size and under which segment it is operating. Internal audit process helps in keeping an internal checks & balances on the company policies & management including corporate governance and accounting processes associated. Internal audit process also ensures that the company is complying with the rules & regulations, laws, financial reporting standards etc.
Various benefits of implementing Internal Audit in your company
- Operational efficiency: without keeping checks and balances on the operational process of the company one would not be able to figure out the extra time and cost which will bring in the efficiency in the company’s functioning. By following Internal Audit Process one could ensure that no such unnecessary cost which is creating a burden on the company.
- Effective production: Cutting on the extra cost which is sometimes included during the production process is a wise decision. This will bring in economies of scale in the production process and will also help in attaining the break-even point very easily. Internal audit will help in identifying the glitch in the production process and minimise the same in future processes.
- Confident stakeholders: Report of internal audit boosts the confidence of all the stakeholders. A stakeholder is confident when the internal audit assures that all the risks are being evaluated and appropriate measures are being taken. This clearly demonstrates that the executive management & the board of directors are managing the organisation effectively on behalf of the stakeholders.
- Quality check: Auditing & assurance service also ensures that a quality check is done before the final product is displayed. Internal audit ensures that the product is as per the standards specified by the company. Quality standards of the product must be met so as to ensure customer satisfaction which will ultimately lead to strong goodwill of the company.
- Reliable corporate governance: Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. Internal audit helps in identifying the problem at the very primary stage at the company level because if any fault is found at the external audit then it might create some serious issues for the company. Therefore it is advisable to conduct a balanced internal audit process primarily involves identify the problems and take corrective steps for the same.
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- Risk evaluation: Management must identify the stages which are associated with the risk and how will they impact their company at large. Internal audit must be able to anticipate future concerns which will affect the company and its production and provide assurance & advice.
- Ensures the compliance of laws: There are various laws which every company has to comply with. If you are running a company then you must comply with the company act, 2013, if you are a manufacturing house then you must comply with the factory act regulations. This is ensured by conducting an internal audit being done by a company’s auditor.
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Chartered Accountant by profession, CA Sanket Agarwal has an experience of above11 years in Cross Border compliance , Import Export , International Taxation & is a passionate content creator.