Internal audit and benefits in internal control in companies
by Aaa Cas Auditors & Business Consultant in DubaiIn recent years, internal audit has taken on
significant relevance at a global level derived from the increase in
information and transactions generated by companies, fraud, new regulations and
the concern of organizations to generate reasonable financial and operational
information for decision-making.
What is
internal audit?
The Institute of Internal Auditors IIA (The
Institute of Internal Auditors) defines internal auditing as “an independent
and objective assurance and
consulting activity designed to
add value and improve the operations of an organization. It helps an
organization achieve its objectives Providing a systematic approach and
disciplined approach to evaluate and improve the effectiveness
of the processes of
management of risk
, monitoring and
governance . "
Proper planning of internal audit based on the
risks of the organizations is essential for its success. The internal auditor
must have the capacity to identify the risks of the organization and suggest
the internal controls that mitigate these risks.
From my point of view, I consider that the
cornerstone of Internal Audit is organizational independence, despite the fact
that the Internal Auditor is hired by the organization. The main way to achieve
this objective is that the Internal Audit department must report directly to
the board of directors and not to the company's management , which allows the
Internal Auditor to evaluate the Company's operation without restrictions and
without affecting its independence at the time of generating reports and
results of your audits.
Read also: Auditors in Dubai
What is
internal audit for us?
The main function of internal auditing is to
evaluate the internal control of the organization, so it must understand,
detect and report the risks of the organization, before they materialize and
lead to loss or damage. Said risks can be fraud, errors, non-compliance with
regulations, among others, that can affect organizations monetarily.
When the internal control of an organization is
effective, the following benefits are generated, among others:
Confidence
in the financial information of the company
Provides
security on the effectiveness and efficiency of the organization's operation
Ensures
compliance with regulatory aspects
Facilitates
access to financial resources
Facilitates
the attraction of potential investors
Reduces
the chances of economic losses
Internal
audit process
The internal audit process can be summarized in 5
phases which are detailed below:
Planning:
During the planning phase, the audit is notified
through an "announcement letter", where an initial meeting is planned
to define and review the audit process, scope and inherent risks of the
operation.
Execution
(field work):
At this stage, the “walkthrough” operation tours
are carried out where the operations of the organization and the control points
implemented are identified, to later carry out tests on these transactions and
be able to determine if the controls implemented in the organization are
sufficient and work properly. Properly.
At the end of the field work, the Auditor will
gather all the findings and corrective actions, which will be presented to the
administration and direction of the company.
Reports:
The final report presents the opinions of the
auditors, makes recommendations and the results of the audit. In general, this
report must contain at least:
Personnel
of the organization to which it is addressed
Scope
and objectives of the audit
The
overall assessment, including findings and recommendations
Monitoring
In this phase, it is monitored that the findings
identified during the internal audit have been corrected by the Organization's management.
Fiscal
application of Internal Audit and control system reviews
in UAE
During the last decade in United Arab Emirates, the
tax authorities of the country have taken on a significant importance to the
“materiality of the operations” , where under certain circumstances the
taxpayer must exhibit the evidential means and certify reliable dates that the
operations consigned in the documents really they existed and were materialized.
Implementing the appropriate controls can also help
us to mitigate possible fiscal contingencies such as the adequate documentation
of the supplier registration operations, purchase, warehouse and deliverables
of the services.
In this context, internal auditing takes on an
important relevance in all areas of the organizations, reducing the risk of
economic losses to a minimum. It is important to have the vision that internal
auditing is not only for public companies, but that it should be used in all types
of organization for adequate growth.
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Created on Jul 1st 2022 08:32. Viewed 235 times.