Your business is aware of the importance of the internal audit function. And you have devised a good audit infrastructure – regular internal audits, good checklist, etc. Is your Internal audit function enough?
In current times, business stakeholders trust the internal audit function more than anything. And while the stakeholder expectations of the Internal audit are going higher, the internal audit mandate is getting more complex. Why?
VGNC’s trend analysis shows that this rise in expectation is due to the increase in value that internal audit delivers. Although it is a positive trend, it’s a daunting task for businesses to enhance their internal audit performance to make it more effective.
So, you think your business has an effective internal audit function aligned with current trends? Here are five attributes of the effective internal audit function. Let’s find out.
Alignment with Business
Internal Audit function must have a clear understanding of the strategic direction of your business. It should also take note of stakeholder expectations. Alignment of auditing scope and results with business goals and stakeholder expectation is what effective internal audit is all about. And for alignment, you need strategic planning and coordination of processes & resources.
The focus should be on creating clearly defined value and incorporation of stakeholder expectations into vision and mission. And to deliver all these attributes, internal audit function must regularly stay abreast of business objectives, goals and directions.
Focus on Risk
An effective internal audit function must have a comprehensive view of all the risk factors– external, internal and emerging. You must have a deep understanding of the actual risk appetite and risk culture of your business along with legal and regulatory requirements.
Your internal audit firm must allocate appropriate time to conduct a dynamic risk assessment to identify critical links of your business. Apart from risk assessment from all directions, your business must also refresh risk plans from time to time to add value to this area.
If you are not leveraging technology efficiently, your internal audit function is not effective. Meticulous use of technology streamlines the execution of the entire audit lifecycle. Audit management systems work with GRC (governance, risk & audit tools) tools to generate efficiency. Data analytics help your business to focus on the right risk areas and issues. Visualisation helps in risk control.
Internal Audit is important to many stakeholders of the business. Although it must maintain objectivity, the reporting lines should be clear and the audit process should be well-defined. The right internal audit service provider will help you articulate all the mandates and objectives. Internal Audit function should drive engagement with business, add timeliness & responsiveness, bring valuable insights and help in decision making. There should be room for improvement and measuring results through analysing feedbacks.
Internal audit helps in cost optimisation by succinctly communicating audit methodology and processes. A regularly updated internal audit function is not only effective but also adds value. Flexibility is the core factor that facilitates cost optimisation through strategic positioning of resources and specialised application of skillset. It also has procedures to measure productivity and cost-effectiveness.
So, will you still say that your internal audit function is effective? A well-aligned internal audit function lays the foundation of success for any business operation in a dynamic market like India.
As a leading internal audit firm in Delhi NCR, VGNC offers comprehensive internal audit services to growing businesses. We help our clients in establishing effective internal audit function and add value to their reporting. To know more, connect with us today!
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