1. What is Internal Audit?

It is an independent checking and opinion on the effectiveness of management’s internal control and risk management processes. Further, it includes checking compliance with internal policies and external rules and regulations.

2. What are the advantages of internal audit?

Effective and Easy Management

Firstly, one of the most important benefits of this audit is that it helps in managing the organization more effectively and easily.

Continuous Review

Secondly, this audit reviews the business performance on a continuous basis.

Improvement of Staff Performance

Moreover, there is fear among the organization’s staff that the auditor will find out their mistakes. Consequently, they remain active and alert.

Efficient Use of Resources

Further, an internal audit helps in efficient and optimum uses of the resources.

Allocation of Work

Lastly, this audit helps promote the division of work in a manner beneficial to the organization.

3. What is the scope of Internal Audit?

The scope is as follows:

Review of Reliability and Integrity of Information:

Firstly, the Internal Auditor reviews the financial and operational information to check its reliability and integrity.

Policies and Procedures Compliance:

Secondly, the internal auditor checks the actual compliance of the policies and procedures of the organization.

Asset Safeguarding:

Further, the internal auditor understands the existing system for safeguarding and suggests any necessary improvement.

Optimum Use of Resources:

Moreover, one of the priorities of auditors is to ensure the optimum use of the resources.

Achievement of the Established Objectives and Goals:

Lastly, the auditor should check that the results of the operations are in no way inconsistent with the decided goals and objectives of the organization.

4. What is the difference between Internal Audit and Interim Audit?

External Audit includes Interim Audit. Further, an Interim audit reduces work pressure during the finalization of the external audit.
consequently, for a company having a year-end in March, the auditor may commence work in December to reduce work pressure at year-end.
An internal audit is an independent evaluation and assurance of the effectiveness of management’s internal control and risk management processes. Further, it includes checking compliance with internal policies and external rules and regulations.

5. What are the objectives of Internal Audit?

Effective Control

One of the main objectives of this audit is to maintain strict control over all the activities of an organization. Further, it helps to establish the authenticity of the financial records and the efficiency of the firm’s operations.

Perfection in Accounting System

An internal audit keeps a trail on the accounting system of an organization. Further,  it checks everything from start to end, like the vouchers, to the authority of transactions to mathematical accuracy. Moreover, every entry is verified, so the chances of mistakes or fraud are reduced.

Review of Business

This audit helps to keep a check on the financial and operational aspects of a business. Moreover, it helps to find out the business’s weak and strong points without waiting until the year-end review.

Safeguarding of Assets

This process consists of the Valuation and Verification of an asset. Further, physical Verification of ownership and possession of the asset is also taken care of.

Errors Minimisation

The errors are detected and, if possible, corrected at the year-end in the case of a statutory audit. However, the errors are found and corrected immediately in the case of an internal audit.

Fraud detection

This helps to detect fraud in a much easier way as there is a continuous check on the employees.
As there is no time gap between fraud and its detection, the employees have no time to cover it. Therefore, an employee is less likely to attempt fraud in the presence of an internal auditor.

6. What is the difference between an Internal check and an Internal audit?

Internal Check is a system wherein the work and responsibilities are divided and organized in such a way that the work of one employee is automatically checked by another employee. However, an internal Audit is an independent review of the ongoing critical examination of the financial and operational activities of the concern by an internal auditor.