There are times when the management of a company decides to look into the performance of the organisation, check whether accounts are recorded correctly and also if all the proper accounting standards are maintained while running the daily operations.
Internal audit of the organisation is one of the best ways to get answers for all such queries. Internal audit serves the purpose of assuring the shareholders of the company that the important functions like operations, corporate governance and risk management are running to their best capacity.
The internal audit performed by the auditors present in the organisation presents a clear view of the operating environment and also ensures that rules and regulations are strictly followed.
What is an Internal Audit?
Internal audit is the process of evaluation of all the aspects of business by an internal auditor. It is performed so as to check if anything wrong is happening and what steps need to be taken for improving the efficiency of the operations.
The areas which are checked by internal audit involve risk management, operations, accounting, financial reporting and internal control.
Internal audits are performed on a recurring basis after a certain period of time like monthly, quarterly, yearly, etc.
Advantages of Internal Audit
Internal audit offers the following advantages:
1. The greatest advantage of internal audit is that it helps in management of the organisation effectively.
2. Internal audit will highlight any incorrect processes that are followed and help in rectifying the processes that leads to improvement in process efficiency.
3. As internal audit is performed on fixed intervals, management has the opportunity to review performance and take appropriate decisions regarding operational improvement.
4. Internal audit helps keeping employees alert about their responsibilities, which helps in improving their efficiency.
5. Internal audit helps in determining areas which need improvement, and accordingly allocation of resources will be done that will be beneficial for the organisation.
This concludes the topic of the Advantages of Internal Audit, which is important for Commerce students. For more such interesting articles, stay tuned to BYJU’S.