Many companies engage independent external auditors to perform planned audits. These audits are designed to provide reasonable assurance about the accuracy and materiality of the information reported. The results of the audit are typically presented in the company’s Audit Committee meeting.
Some companies, however, employ internal auditors to conduct internal audits. They are used to assess the compliance with certain laws and regulations. This can include environmental laws. However, there are some laws that affect companies’ financial well-being. In such cases, failure to comply can result in fines.
The purpose of an audit is to ensure that the organization’s business operations are running smoothly. It also helps management to make decisions and improve their risk management. By analyzing internal processes and procedures, an auditor finds areas that need improvement.
In order to complete an internal audit, an auditor needs to establish a comprehensive understanding of the organization’s operations and processes. These processes may involve technology, policies, finance, and other components. Before the auditor begins the audit, he or she should meet with key personnel to verify that the internal processes are understood.
An internal auditor also must prepare an audit program. This is a document that defines the scope of the audit and the steps required to complete the audit. Generally, the planning phase is comprised of meetings with management and key staff. At this time, the team will discuss the scope of the audit and identify any potential risks.
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