Internal audit

What is an internal audit?

An internal audit is when a company or organization conducts a compliance check using its own employees. These employees have in-depth knowledge of the company that external auditors might lack, allowing them to uncover hidden processes and deviations. However, using internal staff can pose a challenge to objectivity. To mitigate this, it is recommended to involve employees from different levels and departments. 

This makes it easier to identify issues in areas outside one's immediate responsibility. Additionally, some companies engage external specialists to assist with the compliance audit, ensuring accuracy and enhancing objectivity.

What is the Purpose of an Internal Audit?

An internal audit provides a snapshot of the business at a specific time, but it is crucial to remember that it does not reveal the whole picture. The primary goal of an internal audit is to help management find ways to improve and streamline operations. It serves as a tool for verifying that the business aligns with the management's established goals, management systems, governing documents, and more.

Internal Audits in Large and Small Companies

Internal audits are more common in large companies, which often place a greater emphasis on governance and risk management compared to smaller companies. In large companies, management needs various tools to assess company performance, as tasks are usually more divided and specialized. This division means management may not be directly involved in the processes being evaluated. For large companies, internal audits provide the same sense of security about business operations that small companies often have inherently due to their size and close-knit work environments.

However, small businesses can also benefit from internal audits. These audits can highlight overlooked or neglected areas, which might be easier to identify when formally documented. Even though smaller companies often have a better grasp of their work processes, an internal audit can still provide valuable insights.

Regulatory and Certification Requirements

Certain administrative authorities are required to perform internal audits under the Internal Audit Ordinance. Companies and organizations certified according to ISO standards also need to conduct these audits. ISO 19011 is a standard for auditing management systems and serves as a guide for ISO-certified entities. For ISO-certified companies, the primary function of internal audits is to identify discrepancies in the management system and promote improvements. While internal audits are voluntary for other companies, conducting them can still be beneficial for understanding the current state of the business.

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