What is an internal audit?

1. Planning The internal audit department plans the internal audit by defining the scope, objectives and time frame. It identifies the areas to be audited and prepares an audit plan describing the specific activities and resources for the audit.

2. Preparation The internal audit department gathers relevant information and documents about the areas to be audited. It may also conduct interviews with employees to gain a better understanding of the processes and controls to be audited.

3. Conducting the audit The internal auditors perform audit procedures to test the effectiveness of internal controls and processes. This includes conducting tests, reviewing documentation, inspecting work processes and interviewing staff.

4. Identification of risks During the audit, deficiencies, irregularities or opportunities for improvement are identified. These are documented and assessed to determine the extent to which they affect efficiency, effectiveness or compliance with standards.

5. Reporting The internal auditors prepare an audit report summarising the results of the audit. The report includes a description of the audit procedures performed, the deficiencies or irregularities identified and recommendations for improving processes or strengthening internal controls.

6. Follow-up The internal audit department monitors the implementation of recommended actions to correct deficiencies or improvements. It conducts follow-up audits to ensure that identified issues have been corrected and processes are in compliance with standards and guidelines.

An internal audit process can vary depending on the organisation and the specific requirements. However, it is important that internal auditors are objective, impartial and have the necessary expertise and competence to conduct an effective review. Internal audits are used to improve efficiency, effectiveness and compliance with internal policies and to support risk management in an organisation.

External audits are conducted by independent external parties to verify compliance with standards and regulations and to build trust with external stakeholders, while internal audits are conducted by internal staff to monitor and improve internal processes. Both types of audits play an important role in ensuring the efficiency, compliance and continuity of an organisation's operations.

1. Identifying risks Internal audits help to identify potential deficiencies, irregularities or risks at an early stage. Through regular reviews of internal processes and controls, weaknesses can be uncovered and action taken to address them before they become major problems.

2. Improving efficiency Internal audits allow an organisation to review its processes, systems and controls and identify opportunities for improvement. By streamlining workflows, eliminating redundancies and strengthening internal controls, efficiency and effectiveness can be increased.

3. Compliance with standards Internal audits help organisations ensure compliance with internal standards, policies and external regulations. This is particularly important to reduce compliance risks and avoid potential legal consequences.

4. Transparency Internal audits promote a culture of transparency and accountability within the organisation. By reviewing and documenting processes and controls, they ensure that decisions and activities are traceable and that staff are held accountable.

5. Risk management Internal audits support effective risk management by helping to identify and assess potential risks and take appropriate action to manage them. By identifying and addressing risks early, an organisation can strengthen its resilience and minimise potential negative impacts.

Continuous improvement Internal audits lay the foundation for continuous improvement in an organisation. By identifying deficiencies and opportunities for improvement, actions can be taken to continuously improve processes, performance and quality.