What is Internal Audit?
Internal audit is an independent management function, which involves a continuous evaluation of the functioning of an organization to improve its operations.
Objectives and Scope of Internal Audit
The objectives and scope of internal audit functions typically include assurance and consulting activities designed to evaluate their operations and recommend improvements. Our specialized team for internal audit services in Abudhabi, Dubai, and other emirates shall execute the below objectives while performing an Internal Audit for your business: auditing Some of the objectives are listed below:
- Verify the accuracy and authenticity of the financial, accounting, and statistical records.
- Ensure that there is a proper authority for every acquisition and disposal of assets.
- Facilitate the prevention and detection of fraud.
- Confirm that the liabilities have been incurred only for business activities.
- Ascertain accounting policies and estimates are appropriate.
- Ensure that the internal controls are adequate.
- Review the operation of the overall internal control system.
Benefits of Internal Audit in a Business.
- Detection of Fraud and Theft: The main objective of internal auditing is to ensure the reliability of any organization. Internal audits can safeguard a business from loss by identifying potential frauds, operational inefficiencies, non-compliance with laws, and unforeseen conditions like theft.
- Improving the efficiency of the organization: A constant and objective review of policies and procedures ensures that they are being executed as mentioned in the company’s documents. Hence, the organization is assured that the policies are being followed. It eliminates the risks that are foreseen.
- Monitoring Internal Controls: Monitoring internal controls is essential for an organization to ensure that the controls are operating efficiently and effectively. Also, internal control helps to protect the organization’s assets and reduce the possibility of fraud.
- Ensure Compliance with Laws and Regulations: The Internal audit function ensures that the organization is in compliance with the laws, regulations, and other external requirements.
- Improved systems implementation: Internal audits are assessments carried out within an organization to evidence the efficiency and effectiveness of processes and their operating systems.
- Improved processes and controls: Internal audit plays an important role in the business because it improves the processes and the control environment of the organization by assessing its operations.
Few examples to check internal controls
In the process of conducting an Internal Audit for businesses, our team for Internal Audit service in Abu Dhabi, Dubai, and other emirates will also be verifying internal controls such as Revenue, Payroll, and Purchases & Expenses, etc.
- Ensure the authorized price list is used to prepare the invoice.
- Sequence check on Goods Dispatch Notes to ensure all Goods Dispatch Notes have been invoiced.
- Sequence check on Invoices to ensure all invoices have been entered in the accounting system.
- Customer statements should be sent monthly to ensure any errors and disputed invoices are quickly identified and resolved.
- All appointments of staff, whether temporary or permanent, should only be made by the human resources department, separate from the payroll department.
- Any overtime worked reviewed and then authorized. This should be evidenced by the signature on the employees’ overtime sheets.
- Periodic verification of staff cards with personal files of employees (to ensure that there are no ghost employees).
- Bank transfer list/payment list matched to payroll sheet prior to authorizing the bank payment.
- When authorizing the payments, the responsible official should on a sample basis perform checks from payroll records to payment list and vice versa to confirm that payments are complete and only made to existing employees.
3. Purchases and Expenses
- Authorized supplier list used and updated annually (this includes the price of goods, their quality, and the speed of delivery.)
- Supplier statement reconciliation with Purchase Ledger
- Before approving invoices for payment, a senior official should match them
- Segregation of duties (order placement, goods received, and recording).
Internal Audit services in Abudhabi
CA Navaneeth Mattummal, Manager – Abu Dhabi Branch
Internal Audit services in Dubai
Pradeep Sai, Partner