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.
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.
The information an internal audit can provide is a powerful tool available to the management of a company. An internal audit will not automatically fix the problems within an organisation, but it will identify those problems and provide suggestions for how they might be tackled.
An internal audit can provide a comprehensive, detailed, and easy-to-understand look at a company’s practices, thereby making it easier to identify and improve upon faults. The management that pays close attention to the audit’s information will reap the benefits of a deeper understanding of their own business.
These helpful tips were brought to you by Auditor Training Centre.
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Disclaimer – these articles are provided to supply general safety information to people responsible for OHS in their organisation. They are general in nature and do not substitute for legal and/or professional advice. We always suggest that organisations obtain information specific to their needs. Additional information can be found at www.workcover.nsw.au
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