In recent years, internal audit has taken on significant relevance at a global level derived from the increase in information and transactions generated by companies, fraud, new regulations and the concern of organizations to generate reasonable financial and operational information for decision-making.
What is internal audit?
The Institute of Internal Auditors IIA (The Institute of Internal Auditors) defines internal auditing as “an independent and objective assurance and consulting activity designed to add value and improve the operations of an organization. It helps an organization achieve its objectives Providing a systematic approach and disciplined approach to evaluate and improve the effectiveness of the processes of management of risk , monitoring and governance . "
Proper planning of internal audit based on the risks of the organizations is essential for its success. The internal auditor must have the capacity to identify the risks of the organization and suggest the internal controls that mitigate these risks.
From my point of view, I consider that the cornerstone of Internal Audit is organizational independence, despite the fact that the Internal Auditor is hired by the organization. The main way to achieve this objective is that the Internal Audit department must report directly to the board of directors and not to the company's management , which allows the Internal Auditor to evaluate the Company's operation without restrictions and without affecting its independence at the time of generating reports and results of your audits.
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What is internal audit for us?
The main function of internal auditing is to evaluate the internal control of the organization, so it must understand, detect and report the risks of the organization, before they materialize and lead to loss or damage. Said risks can be fraud, errors, non-compliance with regulations, among others, that can affect organizations monetarily.
When the internal control of an organization is effective, the following benefits are generated, among others:
- Confidence in the financial information of the company
- Provides security on the effectiveness and efficiency of the organization's operation
- Ensures compliance with regulatory aspects
- Facilitates access to financial resources
- Facilitates the attraction of potential investors
- Reduces the chances of economic losses
Internal audit process
The internal audit process can be summarized in 5 phases which are detailed below:
Planning:
During the planning phase, the audit is notified through an "announcement letter", where an initial meeting is planned to define and review the audit process, scope and inherent risks of the operation.
Execution (field work):
At this stage, the “walkthrough” operation tours are carried out where the operations of the organization and the control points implemented are identified, to later carry out tests on these transactions and be able to determine if the controls implemented in the organization are sufficient and work properly. Properly.
At the end of the field work, the Auditor will gather all the findings and corrective actions, which will be presented to the administration and direction of the company.
Reports:
The final report presents the opinions of the auditors, makes recommendations and the results of the audit. In general, this report must contain at least:
- Personnel of the organization to which it is addressed
- Scope and objectives of the audit
- The overall assessment, including findings and recommendations
Monitoring
In this phase, it is monitored that the findings identified during the internal audit have been corrected by the Organization's management.
Fiscal application of Internal Audit and control system reviews in UAE
During the last decade in United Arab Emirates, the tax authorities of the country have taken on a significant importance to the “materiality of the operations” , where under certain circumstances the taxpayer must exhibit the evidential means and certify reliable dates that the operations consigned in the documents really they existed and were materialized.
Implementing the appropriate controls can also help us to mitigate possible fiscal contingencies such as the adequate documentation of the supplier registration operations, purchase, warehouse and deliverables of the services.
In this context, internal auditing takes on an important relevance in all areas of the organizations, reducing the risk of economic losses to a minimum. It is important to have the vision that internal auditing is not only for public companies, but that it should be used in all types of organization for adequate growth.
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