Internal Audit – What is it & What are its Purposes?

INTERNAL AUDITING – What is it?

An internal audit is designed to improve and add value to how a company operates. A company can accomplish its objectives with the help of internal audits using a systematic, disciplined approach.

This approach evaluates and improves the effectiveness of;

  1. Risk management
  2. Control
  3. Governance processes

In simple terms, internal audits monitor the effectiveness of the internal control processes that have been established by management.

HOW DOES INTERNAL AUDIT MONITOR EFFECTIVENESS OF INTERNAL CONTROLS?

Internal audit serves many purposes, but the principal tasks include:

  • Risk assessment – Assisting management with identifying and prioritizing areas or processes that require attention and audit focus
  • Process walkthroughs and documentation – Gaining an understanding of the processes and procedures as they currently exist, especially with respect to the IT systems utilized in the processing of high volumes of policyholder/claims data
  • Control assessment – Identifying gaps, also known as “trouble spots,” where procedures and controls are not properly designed
  • Testing – Performing tests of controls to verify whether controls are working as designed
  • Reporting – Providing observations and recommendations to improve processes and controls.

Kilcoyne & Co. Accountants provides technical accounting consulting, international tax planning, state and local tax services, audit and assurance solutions, IT Risk Evaluation, Secretarial and compliance services. For cash flow queries or any general accounting questions, don’t hesitate to contact us! We also provide FREE consultations

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