Basic Steps for Conducting an Internal Audit

Internal auditing ensures an organisation operates efficiently by complying with applicable laws, regulations, and standards. It is a systematic and independent examination of an organisation's financial and operational activities, including its corporate governance processes. It also helps identify any potential risk areas that require improvement.

Businesses must frequently perform internal audits to assess the consistency and efficiency of their financial practices. Unlike external audits, internal audits ensure that corporate rules and procedures are strictly adhered to. Internal audits are an integral part of any organisation's risk management framework. By following the basic steps outlined in this blog, organisations can ensure that they conduct an efficient internal audit that will identify any potential weaknesses and make informed decisions about their operations.

Identify the areas that need an Audit

An internal audit is an established process that can ensure continuous improvement of internal controls or the accounting process. But you need to start clear if you want the outcomes you want. It would be impractical to audit each process within your business. The best method is to identify specific areas whose audits can help your firm flourish. So, make a list of all the areas that require auditing initially.

Determine how Audits should Perform

Internal audit frequency must be decided precisely. If you take a closer look, you'll likely see that some areas require annual audits while others may require half-yearly or quarterly ones. Generally, areas with quality control may require more frequent audits than those dealing with finances. Determining how internal audits should perform will help ensure that the internal audit process is effective and efficient. The internal audit process should be tailored to the organisation's specific needs and risks.

Planning for the Audit

Create a plan and timeline to conduct an audit of an organisation's internal operations, processes, or systems. It is important to have a plan in place to ensure that the audit is conducted efficiently and promptly. The plan should include the objectives of the audit, the scope of the audit, the resources needed, and the timeline for the audit. It should also include any necessary steps for conducting the audit, such as obtaining documentation, interviewing personnel, and testing systems. Having a plan can help an organisation ensure that the audit is conducted properly and any identified issues are addressed promptly.

Announcing Upcoming Audits to Departments

Announcing upcoming audits to departments is an important step in ensuring that all employees are aware of the audit process and are prepared for it. This allows employees to plan and review any areas of their work that may need to be addressed. It also allows departments to be proactive in handling any issues that may arise during the audit. Additionally, it lets departments ensure that their processes and procedures are compliant with applicable laws and regulations. By announcing upcoming audits to departments, organisations can also create a more transparent and accountable workplace.

Document and Analyse Audit Results

Documenting and evaluating audit results helps to identify and address any discrepancies or irregularities in the financial statements, which can help to prevent fraud or misstatements. Additionally, it helps to ensure that the financial statements accurately reflect the organisation's financial position and uncover areas of potential risk or concern that can be addressed and corrected. Documenting and evaluating audit results is a critical component of the financial audit process and helps to ensure the accuracy and reliability of the financial records and reports.

Need help?

Conducting an internal audit in your organisation is an important process that should not be ignored. It involves assessing the internal control systems and procedures in place, reviewing financial statements and documents, and providing recommendations for change. Reyson Badger, a leading accounting and auditing firm, provides a comprehensive range of Audit services in Dubai, UAE, to ensure your business is compliant. Our approved auditors in Dubai, UAE, are highly experienced in delivering internal audit services and can help you to identify and rectify any issues quickly and efficiently.