Need for Conducting Internal Audit

Internal Auditing Mechanism

In order to check the internal control system of an organization Internal Auditing system was launched conducted with the help of various auditing firms in Dubai.

Traditionally Internal Audit functions were set up by corporate management to assess the In-house control system established by management. It acts as a control mechanism to analyze the financial controls of the company.

According to Institute of Chartered Accountants an independent management activity, which analyze working of an organization critically and also present suggestions for the betterment of mechanism of the entity, including the entity’s related strategic risk management and internal control system.

The activity of internal auditing or financial inspection is done by experts after doing detailed research about the culture of the business, and processes. It basically checks for the adequacy of In-house control to deal with risks, the effectiveness of the administrative process and organizational goals and objectives.

The purpose is to gain relevant knowledge of the entity’s accounting system, policies, and internal control procedures. It helps to establish the expected degree of trust to be placed on internal controls. It is the path to assessing the nature, timing, and extent of the audit procedures going to be performed. Apart from that one of basic significance is to coordinate the task to be performed.

As per the Institute of In-house Auditors (IIA), the USA In-house audit is an independent, objective-oriented system designed to increase value and improve an organization’s operational procedure.

Also Read: Main Functions Performed by the Internal Auditors in Dubai

Evaluating the efficiency of Internal audit

1. Cooperation from Management: Internal financial inspection system function cannot be conducted smoothly unless management shows positive attributes toward this system. Internal financial inspectionshould make certain the main objective of conducting In-house financial inspectioni.e. financial inspection charter might be helpful in this case as it present expectations of the stakeholders, auditors, and management. The purpose of Internal should be very clear to the In-house auditor and the top management.
2.  Reporting Channel: in order to make this system crystal clear it is mandatory that report should be presented to high management without any tempering presenting true picture.
3.  Judging Significance of Internal Control: it is very important to check if all In-house controls that in exist are really implemented and are effective. The internal auditor must be considered a failure if he failed to understand the scope of the financial inspection.
4. Reflection of Audit report:

• The summary presented by Director – for top management.
• The operational head should present an executive summary in this regard.
• The detailed audit report should be submitted for operational related personnel and for people who are responsible for the implementation of recommendations and for the CFO of the Company.

5.  Follow-up procedure: The auditor should have a check and balance required financial inspection findings that need to be implemented.
6.  Feedback from the auditor: It is very important for the In-house auditor to take feedback from the client on the financial inspection report which is the final product delivered. Feedback on the quality of the audit report should be taken from the top management.
7. Quality of financial inspection team: Chief Audit Executive must ensure that related people having particular skills in order to complete the financial inspection. If the networking group of the IT department is going to be audited then the auditor’s team should have seasoned and professional experts advisors. It has been noticed that senior experts didn’t join the process thoroughly for lack of timing, therefore they imposed that audit on newly appointed personnel. They don’t have relevant knowledge in the department which may cause deterioration to the auditing process and might cause a negative impact on the reputation of the company. the reputation of the In-house financial inspectiondepartment.
8.  Worker’s management: Data is required in order to originate an financial inspection evaluations. In order to get data from operational personnel, it is mandatory for the In-house auditor to study the conduct or the psychology of the personnel and act accordingly in a smart manner in order to obtain data from the operational personnel and his views about a particular policy or procedure followed in the dept which can produce important financial inspection conclusion.
9.  Cost Reduction: Management expects the In-house auditor to execute his plan as per current competition in the market and to address certain regions which can highlight issues leading to cost reduction in productivity.
10. Proving the worth of Internal Audit:  in order to manage the organization’s overheads, the const implemented on In-house financial inspection must be justified. For that purpose, the Auditing Firm and management should reach a point of agreement to calculate the cost consumed on internal audits.

Formula: the efficiency of In-house  financial inspection can be measured by comparing the value audit’s findings in the monetary form with the cost consumed in conducting an internal financial inspection.

Audit firms in Dubai

We have more than 30 years of experience in auditing, registration of the trademark in UAE and deregistration of the company, certified fraud examiner in UAE. We have the ability to conduct Internal financial inspection(Operational Audit), External Audit (Financial Audit), Statutory Audits with the panel of best Auditors in Dubai.

As per Federal Law No. 2 of 2015, every company must hire a certified licensed auditor with the Ministry of Economy for the auditing of financial issues. There are certainly other reasons and significances of hiring. You can have a look here for the significances of Financial Audit for the Improvement of your business.