Internal Audit: An Essential Practice For Your Business?

Internal audit is an unbiased, independent consulting practice that helps strengthen an organization’s operations and internal controls. By thoroughly examining a company’s processes, internal audits highlight areas that add value, improve efficiency, and ensure compliance with policies and regulations.

Unlike external audits, internal audits are usually conducted by employees within the organization. Although not mandatory, they are an important proactive measure that management and the board can undertake to keep operations running smoothly and risks under control.

Here are a number of instances when a company performs an internal audit:

If a mistake is recognized in your books, it's the right time to conduct an audit. Correcting discrepancies promptly is essential for maintaining regulatory compliance and financial accuracy.
 

• It is advisable to perform an internal audit before seeking funding or a commercial loan. Investors and financial institutions will require reliable financial statements; ensuring their accuracy via an internal audit can significantly strengthen your funding application.
• It's a perfect time to conduct an internal audit when there is a profitability problem within the organization. If your earnings were inefficient in the past, it is desirable to rectify the issue with an audit.
• Regular internal audits are highly recommended for your organization. Instead of waiting for a specific event to necessitate an audit, conducting audits at normal intervals (e.g., quarterly or annually) helps maintain high operational standards.
   

If you want to evaluate your management systems to determine if processes and objectives are in alignment with company policies and regulatory compliance, you can do this quarterly or twice a year.

The operational, financial, and security risks to your firm will increase due to infrequent internal audits, just like they do for each customer or client you engage with. Once the auditing procedures are lax, it may result in an incident that affects management personnel and staff morale. It will be difficult to restore previous production processes to full capacity since there is a higher likelihood that problems will escalate to levels that will seriously harm the firm.
 

How to Prepare for a Successful Internal Audit

Follow these tips to ensure your internal audit runs smoothly:

• Gather all necessary documents: Prepare agreements, policies, procedures, incident reports, and self-assessment questionnaires.
• Set clear audit goals: Define what you want to achieve, so everyone understands their role and responsibilities.
• Establish strict policy standards: Ensure company policies support auditors in performing unbiased reviews without fear of retaliation.
• Combine internal and external audits: Regular internal audits help identify issues before an external audit, ensuring your company remains compliant and ready for re-certification.
   

Auditing gives you a distinct view of your firm’s internal controls, the complete accounting process within the company, and the ability to examine all the available and essential data, such as bookkeeping records and financial transactions, to determine whether or not your company is giving a true picture of its financial condition. The importance of internal audit lies in its ability to detect discrepancies early and strengthen the company’s internal control system. Audits must be conducted regularly to know the firm’s financial condition, and they also give the company a chance to foresee its future financial condition. If audits are not performed regularly, the mistakes keep piling up and could even lead to the closure of the company. Therefore, internal audit for businesses is not just a compliance measure but a proactive approach to financial health. So, regularly conduct your internal and external audits and keep a healthy financial status. To know more about internal and external audits, staying in touch with an auditing and assurance service would be helpful.
 

Get Professional Auditing and Assurance Services in the UAE

Partnering with an expert audit and assurance firm can help you maintain compliance, manage risks, and make informed business decisions.

Reyson Badger, one of the leading accounting and auditing firms in the UAE, provides top-notch internal auditing, external auditing, bookkeeping, accounting, and corporate tax services. Our experienced professionals help businesses of all sizes maintain accurate records and meet regulatory requirements.

If you’re looking for a reputable accounting and auditing firm in the UAE, Reyson Badger is your trusted partner.