7 Benefits of an Internal Audit

What’s the first word that pops into your head when you hear the words internal audit? It probably wasn’t a positive one. But internal audits can be invaluable for businesses to streamline their practices, maximize their profits and keep employees safe. 

Risk Assessment

One of the preliminary tasks of an internal audit is to conduct a risk assessment. In achieving its business objectives, a company may have to undertake processes that contain an element of risk. An internal audit can identify what these risks might be, what their likelihood of occurring is and what their consequences might be if they do.

If these risks are identified as possibilities before they even arise, the company will not be surprised, and a potential crisis can be averted. By identifying the likelihood of the risk occurring, an internal audit can identify which areas should have the most time focused on ensuring the risk remains controlled. Time management efficiency is, therefore, maximised. 

Seven main benefits of an internal audit

1. Identifies inefficiencies

Redundant practices cost money and do not contribute to a company’s bottom line. An internal audit can identify these practices and suggest ways they can be eliminated. 

2. Early Warning System

If undesirable practices occur within the company, an internal audit can identify and remove them before the need for outside intervention or regulatory bodies becomes necessary.

3. Control Environment
Sometimes, gaps can appear in an organisation’s structure, which prevents controls from being properly applied. An internal audit identifies these gaps and ways they can be fixed.

4. You make the decisions

The scope of the internal audit is defined by the management of the company. That means the audit will only cover what you deem appropriate and nothing else.

5. Increases accountability

When processes become muddied and less transparent, it can be hard to identify the specific reason for inefficiency. The internal audit can illuminate individuals responsible for certain processes as to where they are going wrong. 

6. Makes the organization process-dependent instead of person-dependent

When processes are undermined by inefficient practices brought in by individuals, overall company efficiency can be affected. The internal audit makes sure the company relies on mandated processes rather than the whims of an individual. 

7. The report comes to you

The audit is designed to aid your business, so any information gleaned from it is given straight to the company’s management rather than an outside entity.