Featured image by Andrey_Popov
Do you want to ensure your business doesn’t violate laws, regulations, or contractual pacts? One way to stay on the right side of the law is to conduct internal audits periodically.
Internal audits ensure that a company’s risk management, governance, and internal control processes are agile, effective, and audit-ready. According to the Institute of Internal Auditors (IIA), internal audits help businesses reach their goals. They do this by “bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”
RELATED ARTICLE: BUSINESS FINANCE: 8 BASIC TIPS YOU MUST KNOW
Breaking the law—even if inadvertently—can lead to penalties that threaten your company. Therefore, streamlined, transparent internal audits are a must for your business.
Continue reading to see five internal audit benefits your business shouldn’t be without.
1. Internal Audits Strengthen Internal Controls Management
Whether you have an in-house internal auditor or a third-party internal auditor, the internal auditor’s primary responsibility is assessing your company’s controls environment. In short, internal audits involve assessing your business’s management of internal controls. These are controls relating to actions, processes, and systems. Basically, an internal audit ensures your company’s procedures are operating adequately.
Streamlined audits may use an automated internal audit management tool. This tool can automate evidence gathering and provide final engagement reports, certification, planning, and fieldwork in order to deliver an audit-ready ESG report. Because internal audits analyze what internal controls are in place, you’ll get to assess if your internal controls are properly designed, effective, and efficient.
2. Audits Ensure Compliance
Another benefit of an internal audit controls process is that it ensures compliance. When your business conducts an internal audit, the goal is to ensure your company is adhering to applicable laws, regulations, and sector standards.
Naturally, if there are compliance issues, it’s better to uncover them during the internal audit process than to find out after being notified by the authorities.
After finding any compliance problems, your internal auditor will provide recommendations on the best way to rectify things so that your business is on the right side of the law. Using the right internal audit software will make it easier to ensure compliance.
3. An Internal Audit Improves Efficiency
Conducting periodic internal audits will help you determine any risk gaps as they arise. You’ll unearth data that enables you to determine if there are redundant business processes and procedures that can be eliminated.
Further, internal audits can increase efficiency by managing work papers, audit fieldwork, and testing inside a single, secure cloud platform. Therefore, you can spend less time emailing documents back and forth and more time interpreting audit observations to your audit committee. Obviously, greater efficiency can lead to better productivity and higher revenue.
4. Audits Heighten Security
Cybersecurity is important for every business. A lot is at stake, so it’s essential to safeguard against cyberattacks that can hit you financially and reputationally.
One way you can protect your business on the cybersecurity front is by conducting internal audits. You can do this by setting up an inventory of your business’s digital devices. Then look into whether these digital devices are secured per corporate policies. Such an audit can also uncover any issues with your networks and systems so that your team can eliminate vulnerabilities.
5. Audits Verify the Accuracy of Financial Statements
It’s also essential to ensure your financial records are accurate and up to date. All you have to do is look at the news to see the negative consequences of filing inaccurate financial statements.
The adverse effects can deal your company a significant blow. But you avoid these complications by conducting internal audits. In this way, you can keep investors and executives informed with audit reports tailored to their needs. Doing so will help you stay on top of your finances. Then you can be confident all financial statements are accurate and up to date.
RELATED ARTICLE: BUSINESS CASH MANAGEMENT EXPLAINED
Internal Audits Are a Must-Have
Internal audits help companies stay agile against potential risks. They are a must-have for your business. But conducting audits is not just a wise business choice. Your industry may demand periodic internal audits. Therefore, it’s essential to ensure you know what’s required.
Equipping your audit team with an internal audit management tool will help your company with automating risk assessment processes and procedures. This will ensure your business has agile internal controls, keeping you audit-ready. If an internal audit uncovers risks that need to be addressed, your business can use the data to make the necessary changes.
RELATED ARTICLE: CHOOSING AN ACCOUNTANT: TIPS FOR BUSINESSES