Internal Control Audit

Internal controls are mandatory to prevent irregularities in the company. It is also helpful in identifying the drawbacks in the operational activities and taking corrective action towards it. Several companies have designed their policies to ensure a daily internal control assessment to prevent any errors that might arise while performing the duties.

Every company must set up an internal control mechanism to reassure operational efficiency and promote accountability. This article highlights the purpose of Internal Control Audit in an organization.

What is an Audit? How is it integrated with the Internal Control System of a Company?

An audit is a system of objective assurance designed to improve the company's operations. It can assist the company by establishing a systematic structure for directing towards accomplishing the objectives while evaluating and improving the effectiveness of overall governance processes. On the other hand, the internal system covers all the company departments that must be assessed timely.

Auditing internal controls helps ensure that all the departments' current practices are not detrimental to the company’s objective. And wherever any issues are found, it can take measures to control and minimize the damage.

What is the purpose of Internal Control Audit?

Internal Control Audit was established to do the following::

• Ensuring compliance with all statutory laws and regulations
• Designing policies, plans, and procedures for the company's development as a whole.
• Ensure the reliability of financial and accounting information.
• Safeguarding the assets of the company.
• Efficient use of resources.
• To prevent unfair practices in the company.
• Promote accountability among officers/employees towards their duties and responsibilities.
• Direct towards the accomplishment of established objectives and goals.

What is the role of the Auditor Internal Control Audit?

An auditor ensures that the company follows all the laws and rules. The auditor can use his skills and experience to review and evaluate the internal control mechanism of the company and advise the company to set up the internal control system effectively. Apart from such, the auditor can assist in the following ways:

• Reviewing the accounting system as per the laws.
• Framing audit program for company’s assessment.
• Detecting fraud and errors in current activities.
• Review the efficiency of the existing internal audit system and suggest improvements if possible in any way.
• Review the authenticity of the documents and records provided by the management.
• Assuring safeguarding measures.
• Assess the risk management policies of the company.
• Guiding and directing management.
• Can act as internal consultants

Internal audit is not necessarily an annual process; a company can undertake more than one internal audit within a year, focusing on a particular department/activity within the company. The primary focus of internal control audit remains towards detecting the problems and taking preventive measures accordingly.