What is an internal audit?

The objective of an internal audit is to provide independent assurance that an organization’s risk management, governance and internal control processes and operating effectively.

What is the value of an internal audit to the organization?

Internal auditors deal with issues that are fundamentally important to the survival and prosperity of any organization. The difference between internal auditors and external auditors, is that they look beyond the financial risks and statements in order to consider wider issues. These issues are things like the organization’s reputation, growth, its impact on the environment and the way their employees are treated.

In short, internal auditors help organizations to succeed. They accomplish this by a combination of assurance and consulting. The assurance part of their job is to inform managers and owners of how well the systems and processes that are designed to keep the organization on track, are working. The next part would be the consultation they provide to improve those systems and processes.

Differences between an internal amd external audit.

External audit.

Internal audit.

Reports to: Shareholders or members who are outside the organizations governance structure. The board and senior management who are within the organizations governance structure.
Objectives: Add credibility and reliability to financial reports from the organization to its stakeholders by giving opinion on the report. Evaluate and improve the effectiveness of governance, risk management and control processes. This provides members of the board and senior management with assurance that helps them fulfill their duties to the organization and its stakeholders.
Coverage: Financial reports, financial reporting risks. All categories of risk, their management, including reporting on them.
Responsibility
for
improvement:
None, however there is a duty to report problems. Improvement is fundamental to the purpose of internal auditing. It is done by advising, coaching and facilitating in order to not undermine the responsibility of management.