Internal Audit Service is an independent, objective assurance and consulting activity intended to add value and develop an organization’s operations. Internal Audit helps business to achieve its objectives by bringing a methodical, meticulous and disciplined approach to assess and enhance the effectiveness of risk management, control, and governance processes.
Internal Auditing is an activity carried on by the internal auditor to meet the management requirements of information. It is an independent appraisal activity within an organization for the review of operations as a service to organization.
What is the Role of an Internal Auditor?
Internal Auditor’s role is to provide Management with independent assurance on organization’s internal controls, risk management strategies and governance are operating effectively. Internal Auditors’ function includes supervising, evaluating, investigating and analyzing the risks & controls; checking and ensuring information and compliance with policies, procedures, and laws. Internal Auditor will assess for the achievement of goals and objectives set by the Senior management. In case of short of stated goals, the auditor will identify process gaps and make suggestions for improvement for bridging the same.
Objective of Internal Audit:
The objective of Internal Audit is to evaluate and improve the effectiveness of governance, risk management and control process. The overall objective of internal auditing is to assist all members of the management in exuding their responsibilities. Also, to help them with objective analysis, recommendations and relevant comments concerning with any phase of business activity wherein they can be of service to management. In short, Internal Audit will help the management for: –
- Assessing the Risk involved
- Assisting management in evaluation of internal controls
- To bridge the gaps by strengthening the internal controls and to accomplish organizational objectives
- Evaluating process performance and managing risk effectively
- Help to find the deviations from KPI and to get proper recommendation/ suggestion for improvement
- To verify fulfilment of plans and sound business requirements and also to focus on objectives
- To evaluate evidence in connection with the situation and issues
Methodology Used in Internal Audit: –
1 Defining the Scope of Internal Audit
| Risk Rating | Risk Nature | Audit Areas |
| May change based on Industry | Financial | 1.Procurement & Purchasing
2. Maintenance of Books of Accounts 5.Inventory |
| Operational | 1. Information Technology
2. Fixed Assets |
|
| Regulatory/ Compliance | 1. Finance 2. Compliance |
|
| May change based on Industry | Operational/
Financial |
1. Human Resource & Payroll 2. MIS / Business Reporting |
| May change based on Industry | Operational | 1. Admin/ General operations 2. Human Resource |
2 Drafting the Risk Assessment Matrix
Risk Assessment Matrix (RAM) is used to define the risk category of each process and sub-process or areas under the scope of Audit. The level of risk is defined considering the likelihood or probability against the category of consequence severity.
3 Risk based Internal Audit Plan
A detailed Audit plan will be drafted in discussion with the Management and areas to be prioritized depending upon the risk category & also the nature of function.
Broad areas to be Covered (Can vary depending on the industry and choice of Management)
- Revenue
- Procurement of Goods/ Services
- Inventory
- Logistics
- Information Technology Infrastructure.
- Finance
- Fixed Assets
- Statutory Compliance
- Admin & general Operations, etc.
4 Execution of approved Internal Audit Plan
On Approval of Audit plan, fieldwork is executed by performing walk-through, enquiry, questionnaire etc. Clients are kept informed of the audit process and status of audit.
5 Submission of Draft/ Final Reports to highlight the issues with risk rating and reporting to the management
Once the execution stage is completed, all the observations are collated in a draft report. The risk rating is allotted to all observations with the responsibility of the concerned function. This report is discussed with the Management or Authorised personnel to highlight the issues, concerns and deviations.
6 Follow-up and Action Taken Report
As it will be a continuous process, the scope does not end with submission of reports. The follow-up action taken report (ATR) will be represented to the management on the status of observations and its closure status. Any long pending observations critical to the business will be bought to the notice of the management to set further course of actions.
Independent review and appraisal of organization’s financial and relevant operational activities will be better, when the internal auditor is not part of the organization and is independent.
Emirates Chartered Accountants is a leading Auditing firm in the UAE. If you are looking for Financial Control Audit, Audit & Assurance Services in the UAE, then you are in the right place. Emiratesca Group provides highly qualified professionals in the related field of work by providing a wide range of Audit and assurance services all over UAE – Dubai, Abu Dhabi, Ajman, Sharjah, Fujairah & Ras Al Khaimah.
Emiratesca also provide the following related services,
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Internal Audit Service in Dubai Mr. Manu Email: manu@emiratesca.com Mobile: +971 50 282 8727 Phone: +971 4 2500290 |
Internal Audit Service in Abu Dhabi Mr. Pradeep Email: sai@emiratesca.com Mobile: +971 55 653 0001 Phone: +971 4 2500290 |
Internal Audit Service in Northern Emirate Mr. Praveen Email: praveen@emiratesca.com Mobile: +971 50 887 3115 Phone: +971 4 2500290 |
