With so much global uncertainty, change seems to be the only true constant. Having a strong internal audit department can help business leaders make better decisions for future growth and success. Hence, it is vital to employ a robust internal audit structure in the company. The internal factors can include the functioning of different departments, processes, the well-being of the staff, robust payroll system etc. In addition, an internal audit can ensure that the systems put in place are efficient and serve the company management’s intended goals.
The employees carry out internal audits to gauge overall risks to security and compliance to identify if the company is following internal guidelines. Management teams can use the reports generated from internal audits to identify areas that require improvement. Internal audits measure company objectives against output and strategic risks.
A robust internal audit structure in a company will ensure an organization is competition ready in the industry. Following are some of the best audit practices.
Risk assessment and business strategy
The audit team should understand the business strategy and assist the management by identifying and prioritizing the areas or processes that require attention and audit focus. The team should study all the previous audit reports and findings, and draft a risk assessment report. It should address all the pain points and report any results to enable the organization to:
- Prioritize audit projects according to the level of potential risk
- Determine the direct relation to the level of the risk
- Plan for performing internal audit projects in risk areas to minimize the risk of loss
- Use time in an effective and efficient manner
Training the internal audit team
The internal audit team should be trained to conduct an effective audit program and meet required audit standards. It is vital to gain an understanding of the existing processes and procedures utilized in the processing of high volumes of claims data. The training by adopting the modern technologies with specific checklists provides a higher value-added opportunity for the company to ensure sound management systems.
Reporting structure of the company
The transparency in the company’s reporting structure would assist the internal audit team to observe and provide recommendations with respect to auditing guidelines in Dubai and to improve processes and controls. Any discrepancies in the reporting process will negatively affect the communication and working of the internal audit team.
Adopting data analytics on the internal audit process
An effective audit can be performed by adopting data analytics on the internal audit process. It provides enormous amounts of clean, structured data and provide necessary insights for the internal audit team. It further enables the auditors to extract the required information, identity, analyse patterns, and detect any discrepancies in the system.
Benefits of internal audit
Having understood the audit best practices and management’s responsibility for internal controls, let’s concentrate on the benefits of internal audit
- The scope of the internal audit is defined by management or the Board but, not an outside agency
- Internal audit “reports” directly to management or the Board
- Improves the “control environment” of the organization
- Makes the organization process-dependent rather than person-dependent
- Identifies redundancies in operational and control procedures and recommends to improve the efficiency and effectiveness of procedures
- Serves as an “Early Warning System” by identifying the deficiencies and make amendments prior to regulatory or compliance audits
- Ultimately, it increases the accountability within the organization
Having an internal audit team would assist the management with the company’s risk assessment process and ensures that the responsibility for maintaining a system of internal controls has been fulfilled.