What is an internal audit?
Internal audit is when a company or organization performs a compliance check with the help of employees within the business. Employees possess a knowledge of the company or organization that external auditors cannot know and can thus shed light on processes and deviations that are hidden from outsiders. However, the disadvantage of using employees in the business to perform an audit is the problem of objectivity. To avoid this, it is recommended that employees from different levels and departments be involved in the audit. It is easier to point out deviations in other areas than in one's own. Some companies and organizations also enlist the help of external specialists who assist in the execution of the compliance audit to ensure that everything goes right and to increase objectivity.
An internal audit gives an idea of what the business looks like at a certain specific time, but it is important to remember that such a review does not show the whole truth. The purpose shall be that the review shall give the management the opportunity to find ways to improve and streamline the work. It is the management's tool for checking that the business is run as the management has decided in goals, management systems, governing documents and more.
Internal audits in large and small companies
It is more common for large companies to use internal auditing as they tend to focus more on governance and risk management than small companies do. The reason for this may be that the management in larger companies need different tools to be able to assess how things are going for the company. Small companies can more easily feel secure in knowing what the work processes look like and that the company is run in a certain way as the employees in smaller companies are often involved in all or very many work processes. In larger companies, the tasks are usually more divided and specialized and the management may not be involved in the work processes that are to be evaluated. The larger a business is, the more important the review of the business thus becomes for the management. It gives management the same security in knowing how the business feels that small businesses possess automatically because of its size. However, it can also be beneficial for small businesses to do a similar check to highlight areas that may have been forgotten or neglected. Sometimes it is easier to highlight such points when it is to be written down in an evaluation than in the daily work.
Some administrative authorities are required to perform internal audits in accordance with the Internal Audit Ordinance. Companies and organizations that are certified according to ISO also need to do these checks. ISO 19011 is a standard for audits of all management systems that can be seen as a guide for ISO-certified companies and organizations. Internal auditing for ISO-certified companies has as its primary task to check for discrepancies in the management system and promote the possibility of improvements. For other companies and organizations, this review of the business is voluntary, but it can still be good to carry out to take the pulse of how the business is doing.