The Importance Of Internal Audit
There are two entities that make a business run smoothly: the people and the money. If something goes wrong with any of the two, the business will be put in jeopardy. If the people made protests due to low wages or lack of benefits, the good image of the company will be stained. Likewise, the business cannot operate if they money is not there due to low profit or mismanaged funds.
How Internal Audit works
Money can be tempting and those who have access to company funds may have the urge to keep some for them. Through Internal Audit, the possible financial loopholes are revealed and solutions on reducing company expenses are formulated. Auditing is a very demanding task especially for companies with a huge number of employees or established corporations.
Basically, auditing involves the tracing of the company’s cash flow for a specified period. The accounting books and ledgers are handed to the auditors who check if the calculations are in sync with the financial report. Receipts, billing statements and proofs of payments are also analysed to determine the accuracy of the records. Discrepancies can be unearthed and the responsible parties can be questioned about it.
If proven guilty, charges can be filed against those who stole from the company funds and they might be asked to give back what they have taken. Also, auditing reflects the spending ways that the company can reduce to increase profit.
Who can perform Internal Audit?
Certified accountants are the most qualified people to perform auditing. Companies even hire third-party accountants because Internal Audit requires that the auditors remain objective with the task at hand. Accountants within the company might conceal the financial blunders that they have done come auditing time.
Businesses turn to accounting firms to facilitate the auditing. However, they require a higher fee than independent accountants. Yet, they can produce faster results for they have more personnel who work together. Licensed accountants are the only ones who can certify the accuracy of the auditing.