6 Benefits of Internal AuditingPublished July 14, 2020 by Tricia Scherer • 3 min read
If you want confidence that your organization is meeting its core business goals, you need internal audits.
If you want to save your organization time and money and keep everything running like a well-oiled machine, internal audits will help you get there.
If you want to protect your enterprise against fraud and prevent fraudulent practices, internal audits are key.
If you want to reduce risks to your operations, finances, cybersecurity, and other areas of concern, internal audits will tell you what you need to do and how to do it.
If you want to make sure you’re following the laws, regulations, and standards that apply to your organization—and reduce your costs and hassle when external auditors test your compliance—you’ll want regular internal audits.
If you want to be able to tell your board of directors and audit committee with confidence that the entity’s internal controls and business processes are functioning as they should, ask your internal auditor.
Effective internal audits offer so many business benefits that we could write an entire book about them. Suffice to say that, aside from the cost of paying an auditor—and these highly trained, certified professionals don’t come cheap—there really is no downside. And by automating, you can even reduce your costs.
What an internal auditor does
The Institute of Internal Auditors (IIA) defines the internal audit process this way:
“Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”
Internal auditors act as objective consultants to your enterprise, advising you on how to improve your processes, especially those concerning risk management, governance, and internal controls. They form their opinions after assessing those processes and their results, which they find by analyzing data.
The internal audit function works from within, serving as watchdogs over your organization’s integrity and accountability, scrutinizing your financial reporting, guarding against fraud, errors, and risks and providing objective assurance that your entity is following the regulations and standards that it should. Internal audits can also help you avoid financial loss.
6 benefits of internal auditing
- Strong internal controls. Evaluating your enterprise’s control environment is your internal auditor’s number-one task. Internal audits evaluate your internal controls, which comprise actions, systems, and processes—including monitoring—to ensure that they are well designed and implemented and that they are working as they should be—no matter who serves in which role.
- The COSO framework Internal Control-Integrated Framework defines “internal control” as “a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.”
- Efficiency. Internal audits spot redundancies in your business practices and procedure and your governance processes and come with recommendations on how to streamline, saving time and money.
- Security. Internal audits scrutinize your cybersecurity environment, counting all your digital devices, for instance, and examining whether they are secured in line with your policies. They also look for vulnerabilities in your digital systems and networks and advise on how to close gaps.
- Integrity. Headline-grabbing cases of fraud at the turn of the 21st century—fraud involving major companies including Enron—were the impetus behind the COSO framework. As a result of the scandal, Enron went bankrupt. Caveat emptor: People aren’t always honest. Also: to err is human. Internal audits analyze and scrutinize your financial statements and verify their accuracy and integrity.
- Reduced risk. Internal audits consider all the identified risks to your enterprise and analyze whether your risk mitigations are working as they should. Where they aren’t, audit reports will tell you what you need to do to resolve the issue.
- Improved compliance. Internal audits check the laws, regulations, and industry standards with which your organization needs to comply and determine whether you are, in fact, compliant. Where you miss the mark, auditors recommend how to remedy the problem.
How automation improves internal auditing
Regulations change. Cybercriminals devise new methods of breaching systems, networks, and devices. Fraudulent practices can slip under the radar.
Internal audits will catch these and other issues, but in the interim between audits is where they occur. Continuous monitoring is imperative—but your auditor can’t be in all places at all times. To help, you need automation.
ZenGRC offers unlimited internal audits with just a few clicks of the mouse. It displays results on user-friendly, color-coded dashboards so you can see where gaps and how to fix them—and its workflow features allow you to assign, track, and manage your governance, risk management, and compliance tasks.
In between audits, Zen continuously monitors your controls from systems, networks, and applications to ensure that they are effective and up-to-date between audits.
And its “single source of truth” repository collects and organizes your complete audit trail so you’re ready when it’s time for those dreaded external audits necessary to demonstrate compliance and attain coveted certifications.
With internal audits taking care of themselves, you can turn your attention to other matters—like boosting your business and your bottom line. Worry-free internal audits: that’s the Zen way. Contact us now for a free consultation.