The practice of large international companies and its generalization by reputable professional associations (Institute of Internal Auditors, International Auditing and Assurance Standards Board, etc.) make it possible to successfully use the tools of internal audit in solving actual business management problems. Meanwhile, the level of its application by the domestic business (especially the non-banking sector) is significantly behind the best practices of Western companies. One of the reasons for this state of affairs seems to be a lack of understanding of the essence of the internal audit and the advantages it provides. You can trust on the auditing outsourced services for the same now.
The Essence of Domestic Management Now
- Domestic management is well acquainted with the practice of creating and using internal control services and control and auditing services of companies. The latter focused mainly on the control of the safety of inventory, the effectiveness of spending money and the use of other resources; executing orders of management and higher authorities, as well as on the investigation of fraud.
- Internal audit shifts emphasis from identifying violations and mistakes to punish those responsible for providing recommendations to improve the organization’s activities; expands the range of tasks in the direction of control systems, risk management, corporate governance.
- The Institute of Internal Auditors, the largest international professional association of internal auditors, represented in 160 countries, gives the following definition of internal audit:
- Internal audit is an activity of providing independent, objective guarantees and consultations aimed at bringing in added value and improving the organization’s activities. It helps an organization achieve its goals using a systematic, consistent approach to assessing and improving risk management, control and process management.
In accordance with the Glossary of Internal Audit, developed by the Institute of Internal Audit:
The provision of guarantees (Assurance Services) is understood as an objective analysis of the available audit evidence in order to present an independent assessment of the corporate governance, risk management and control processes in the organization.Examples are given tasks on financial audit, performance audit, compliance audit, systems security audit and comprehensive due diligence engagements.
Consulting services (Consulting Services) are understood as activities to provide clients with advice, recommendations, etc., the nature and content of which are coordinated with the client, aimed at assisting and improving the processes of corporate management, risk management and control, excluding the adoption of responsibility by internal auditors for management decisions.
- Examples include the provision of advice and recommendations, the provision of practical assistance and the training of personnel.
Internal audit operates in the interests of internal users of information – executive management, council, owner held on an ongoing basis, i.e. is a day job in the company. It covers such types of audit as operational audit, compliance audit and audit of financial statements and, accordingly, includes their subject areas and uses their methods.