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Various Benefits Of Implementing Internal Audit In Your Company
- Operational efficiency: without keeping checks and balances on the operational process of the company one would not be able to figure out the extra time and cost which will bring in the efficiency in the company’s functioning. By following Internal Audit Process one could ensure that no such unnecessary cost which is creating a burden on the company.
- Effective production: Cutting on the extra cost which is sometimes included during the production process is a wise decision. This will bring in economies of scale in the production process and will also help in attaining the break-even point very easily. Internal audit will help in identifying the glitch in the production process and minimise the same in future processes.
- Confident stakeholders: Report of internal audit boosts the confidence of all the stakeholders. A stakeholder is confident when the internal audit assures that all the risks are being evaluated and appropriate measures are being taken. This clearly demonstrates that the executive management & the board of directors are managing the organisation effectively on behalf of the stakeholders.
- Quality check: Auditing & assurance service also ensures that a quality check is done before the final product is displayed. Internal audit ensures that the product is as per the standards specified by the company. Quality standards of the product must be met so as to ensure customer satisfaction which will ultimately lead to strong goodwill of the company.
- Reliable corporate governance: Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. Internal audit helps in identifying the problem at the very primary stage at the company level because if any fault is found at the external audit then it might create some serious issues for the company. Therefore it is advisable to conduct a balanced internal audit process primarily involves identify the problems and take corrective steps for the same.
Company Audits : Company Audits is governed by the Companies Act, 2013. Company audit has the objective of reporting the state of the company’s accounts & finance to the regulatory authority. Audit and assurance services like company audits are performed by qualified auditors who are working as an independent external party. The audit report form has its own set of rule that is set by the Government. Rules on the appointment, change, removal of auditors has specific rules.
Income Tax Audit : Section 44AB of the income tax act has the provisions related to the audit of accounts. Income tax audit under this section is mandatory for certain class of taxpayers that depends on turnover and receipts limit. To understand if you are liable under the tax audit, you can consult tax advisors that is Chartered Accountants near you. A tax audit can be performed only by a Chartered Accountant.
For banks, financial institution, for power companies, the law of banks, power Governs their statutory audit.
Internal Audit Procedure, Internal Audit Report: All listed companies have to mandatorily conduct an Internal Audit, for unlisted and for private limited companies, internal audit becomes mandatory that depends upon paid-up share capital, borrowing or deposits. In our FAQ below you can see in detail the limits for Internal audit in India.
Internal Audit Procedure starts where auditor see and analyses the current process, the system in an organization. The system and procedure like the management process, authorization process, how things flow for a different department. After analyzing these things assessment is done where auditor will compare the result that he analyzed at the first step with the internal control functions if it is in line with regulatory norms and internal policies of the organization. The internal audit report is prepared after as a final step of Internal Audit Procedure. The internal audit report shows the comparison and also recommendations are made by auditor wherever required.