An internal audit is a systematic, independent and documented process for obtaining information and assessing it objectively to determine the adequacy, effectiveness and conformance of the system being audited. It helps an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control and governance processes.

With that in mind, here are the top 10 reasons why your business needs an internal audit.

An internal audit can help you identify and remedy personnel and HR issues

One of the most meaningful things that this can expose is personnel and HR issues. It’s only too common for businesses to turn a blind eye to staff problems and recruitment issues, but an internal audit can bring these festering sores out into the light so they can be dealt with. This is vital for the long-term health of your business, especially when it comes to finding new candidates and onboarding people properly. 

It provides an objective assessment of your business’s financial health

An internal audit provides an objective assessment of your business’s financial health. This is because the auditor is not affiliated with your company and does not have a vested interest in its success or failure.

As a result, an internal audit gives you an honest opinion about the state of your finances and where improvements can be made. This is invaluable information that can help you to make better decisions about the future of your business. A lot of businesses do not have a clear understanding of their financial situation because they do not have an internal audit system in place to ensure that accurate information is being reported.

An internal audit can help you to identify and correct errors in your financial reporting

If there are errors in your financial reporting, an internal audit can help you to identify them and correct them. This is important because inaccurate financial information can lead to poor decision-making and ultimately, business failure.

For example, if your financial reports show that you are making a profit when you are actually making a loss, you may make decisions based on this incorrect information. This could lead to you expanding your business prematurely or taking on too much debt. On the other hand, if your financial reports show that you are making a loss when you are actually making a profit, you may make decisions based on this incorrect information. This could lead to you cutting back on your marketing budget or reducing your staff, when neither of these things may be necessary.

An internal audit can help you to identify and prevent fraud

Fraud is a serious problem for businesses of all sizes. It can have a devastating effect on your business, so it is important to do everything you can to prevent it. An internal audit can help you to identify areas where fraud might occur and put measures in place to prevent it.

For example, if you have a system in place for approving expenses, an internal audit can help you to identify any irregularities. This could include things like employees claiming for personal expenses or submitting fake receipts. By identifying these problems, you can put measures in place to prevent them from happening in the future.

An internal audit can help you to improve your financial management

If you want to improve your financial management, an internal audit can help you to identify areas where improvements can be made. This is because the auditor will take a close look at all aspects of your financial management, including your accounting system, your financial reports and your internal controls.

The auditor will then make recommendations about how you can improve your financial management. For example, a good internal auditor may recommend that you implement a new accounting system or put in place better internal controls. By following the auditor’s recommendations, you can be sure that your financial management is as effective as possible.

It can help you to save money

This can help you to save money by identifying areas where your business is wasting money. For example, the auditor may find that you are paying for unnecessary insurance or that you are not claiming all of the tax deductions to which you are entitled. By identifying these problems, you can save a significant amount of money.

The problem is that a lot of businesses are under the impression that an internal auditor is all cost. They are there to uncover what is being done wrong, but that is only half of it. If you know what your business is doing poorly or where there is major room for improvement, what you can end up getting out of the process are opportunities for massive financial savings.

An internal audit can help you to make better decisions about strategic planning

If you want to make sure that your business is on the right track, an internal audit can help you to make better decisions about strategic planning. This is because the auditor will take a close look at your business and give you an objective opinion about where it is going.

For example, the auditor may identify that your costs are too high or that your product is not selling well. By identifying these problems, you can make the necessary changes to your business plan and ensure that your business is successful.

An internal audit can help you to improve your customer service

If you want to improve your customer service, this can help you to identify areas where improvements can be made. This is because the auditor will take a close look at all aspects of your customer service, including your telephone answering system, your complaint handling procedures and your staff training.

The auditor will then make recommendations about how you can improve your customer service. For example, the auditor may recommend that you implement a new telephone answering system or put in place better complaint handling procedures. By following the auditor’s recommendations, you can be sure that your customer service is as effective as possible.

An internal audit can help you to comply with legislation

Legislation changes and businesses need to be agile enough to pivot when required. An internal audit can help you to identify areas where your business needs to comply with new legislation. For example, the auditor may find that you need to implement new health and safety procedures or that you need to make changes to your data protection policies. By identifying these problems, you can ensure that your business is compliant with the law.

It can give you a more objective understanding of your business

It’s all too easy to get too close to your own business and lose sight of the big picture. An internal audit can give you a more objective understanding of your business and help you to identify areas where improvements need to be made.

Conclusion

An internal audit is an important tool that every business should have. By having an internal audit, you can be sure that your business is run effectively and efficiently. If you have never had an internal audit before, now is the time to consider one. Your business will thank you for it.