Effective Approach for Internal Auditing

by Gulshan Aggarwal Digital Marketer

Internal Auditing:

The concept of Internal Auditing is not new in India. It means examining a company’s performance and work by evaluating the data and records by the management of the company. Since they are done on the internal levels of the company thus it is called Internal Auditing. Internal Auditing is done by Chartered Accountants or Cost Accountants or any such person hired as an Internal Auditor by the company’s management or Board of Directors. Every company having GST Registration and pay taxes must have the Internal Auditing done. Internal Auditing helps a company to know whether there is any hindrance in the efficacy of the management, whether the internal control management is working effectively, whether the risk management is applicable as per the measures, whether there is any glitch or fraud in the transactions or production. Internal Auditing helps a company to know whether it is working towards its set goals and achievements or not.

Must Read: Internal Audit Services in Delhi

Checklist in Internal Auditing:

In Internal Auditing there is a checklist that serves as tool helping the Internal Auditor to effectively conduct the audit in the company. There are lots of benefits of Internal Audit Checklist. It contains a lot of points that serve as a reference point to start the audit. These checkpoints are-

Individual KYC

Non Corporate KYC

Corporate KYC

Other than KYC

Statutory Compliance

Compliance

Compliance under Other Relevant Enactments

Compliance Under Indirect Tax

Purchase/ Procurement

Sales/Service/Revenue

Inventory and Stores Management

Operational and Admin Expenses

HR and Payroll

 

Challenges in Internal Auditing:

 

In spite being a totally internal evaluation procedure Internal Auditing does face certain challenges that cannot be neglected. These challenges are-

 

There is usually lack of any prescribed guidance for the Internal Auditors that they can follow while conducting Internal Auditing.

The Internal Auditors usually believe that all the groups within the other lines of defense mechanism from risks lack serious maturity.

There is always a concern about the reliance taking or impairing over the independence and objectives of the Internal Audit in the factual or appearance way.

 The three lines of risk management defense mechanism has its own definition and understanding of risk and risk management, this usually creates misunderstanding among them and affects their cooperation.

 

Principles to be integrated in Approaches for Internal Auditing:

 

There are certain principles that must be incorporated in the approaches to achieve each of them for the benefits of the company. They are-

 

Purpose, goals and objectives of the company.

Identifying the organization’s freedom and independency to carry on responsibilities.

Looking into the standards followed and maintained by the company to achieve its objectives.

Determining the technical qualifications, certification and training management of the company.

Communication of the results and responses are on time.

The remedies provided are impactful or not.

 

Effective Approach for Internal Auditing:

 

Internal auditing needs various approaches in order to achieve all the objectives of auditing in a company. These approaches are-

 

Achieving the reliance to meet the standards of auditing.

Addressing the challenges faced by Internal Auditing.

Application of all the measures required while conducting audit and even after its completion.

 Placing the reliance in the correct line of defense.