Internal Audit- Connecting the Dots!
Internal audit—connecting the dots
The world of business is constantly changing and globalization has proved to be of paramount importance for this changing world. This globalization has produced widespread dots or operations as the challenge for management to govern in an efficient manner.
Proper establishment and operations of internal audit generate reliance which connects the dots and builds trust and confidence over the widespread operations of an organization.
For an internal audit to be comprehensive and target oriented, it must be planed systematically with a documentary approach.
Analytical procedures as the tool of internal audit further helps in assessment of dot’s position in the galaxy to ascertain fluctuation and smoothness of operations.
This further clarifies the relative performance of a specific operation in financial and operational terms.
This is the key concept for the ascertainment of figures in specific heads of financials and numbers from different departments. This tool is also used to obtain an evidence or assurance during fieldwork. This is thought to have an essential ability to identify potential errors, potential fraud and unusual transactions or events that affect the organization in an adverse manner. Timely identification of potential errors and fraud helps an organization in the eradication of control weaknesses and loopholes from a system.
Global expansion of Multinationals further brings some additional challenges as topics such as local regulation, economies of scale by integration of different regional economies, currency risk, consistency in financial and other reporting across organization and understanding of local norms of stock exchange for listed companies is an additional management challenge.
Internal audit procedures specifically designed for specific risk produces remarkable results to address the vulnerability of risks.
Widespread dots or operations of organizations produce additional risks which can be controlled to bring things in risk appetite of the organization.
In addition to analytical procedures, Corporate Governance is another tool that can be used by internal auditors to control the operations of a company.
The economy of the world is constantly changing which brings new challenges every day to the organization. The governance’s control over an organization’s hierarchy at the strategic level offers the ability to believe segregation of duties and qualified personnel at the top in a hierarchy.
Corporate governance further ensures proper reporting hierarchies with the distribution of related work to equip an organization with strong controls. Another great challenge created by globalization is communication and e-commerce which are key to manage and control the organization in all aspects including normal operations of company and growth perspective. Another trend observed in the current market is decentralization with a large span of control to minimize the cost.
Decentralization exposes an entity to a greater vulnerability for control deficiency and increased risk.
Current trends and in-built risks produced by the globalization of multinationals create enhanced demand for the application of certain control techniques; especially, analytical procedures and Corporate Governance.
In addition to this, designing specific audit procedures for specific risk brings risk to the risk appetite of an entity.
As a matter of fact, control techniques equipped with strong governance structure connects the dots of widespread organizational operations and helps an organization to grow in a safe and sound control environment.
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