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The rapid growth of your business is exciting for you, but it can also be overwhelming. As your business expands, it becomes difficult for your company to keep pace with the growth. A common problem that fast-growing companies face is the lack of standard processes and systems leading to quality issues, delayed delivery and failure to honour commitments to your customers when the business grows exponentially.
Hence, you would agree that once your business starts pivoting, it is time to act on streamlining your systems and processes. To sustain the growth of your business, you will need to improve the effectiveness and efficiency of your operations. Some common challenges that businesses encounter at this growth stage are:
- How do you handle the growth of your business?
- What are some ways to effectively manage growth?
- How do you prevent business failure?
- How do you plan your future growth?
A common solution that every organization applies to this problem is Internal Audit. Internal Audit helps you identify the key areas that are working well and the ones that need improvement. A good Internal Audit helps your company maintain a good balance between operational excellence and sustainable growth.
What is Internal Audit
Internal Audit is an integral part of an organisation. It is a continuous and systematic process of evaluating and improving an organisation’s effectiveness and efficiency in achieving its objectives by managing risks and enhancing control in its operation.
Internal audit has been described as “A management tool’ that provides independent, objective assurance and consulting services to an organisation’s board of directors and management, thereby promoting effective governance, accountability and operational effectiveness.”
In a nutshell internal audit involves review of the;
- Organisations’ internal processes followed and internal controls in place to manage the business operations and its risks
- Systems used to record the transactions (operations and financials)
- Compliances with regulatory laws, internal policies and procedures
The main objective of any internal audit is to determine weaknesses that may hinder the company’s operations. Through these audits, companies can establish a strategic direction, enhance their competitive edge, and improve their performance.
How does Internal Audit add value?
Internal Audit helps reduce financial and non-financial risks for an organisation
An organisation can identify and improve areas which are adversely affecting the growth, productivity and efficiency of its operations, employees and systems. Some of the key benefits are as under:
- Critical business risks and success factors are defined, measured and monitored
- Adequate internal controls are in place to mitigate/minimise the risk of fraud, error and omissions
- Adequate profit margins are achieved
- Cash flow and funds are adequately managed
- Management receives correct and timely MIS and a Dashboard for decision-making
- Procurement operations are effectively managed (viz. buying the right quantity at the right price, at the right time and right place)
- Zero/minimal wastages/damages
- Assets (inventory, cash, fixed assets) are safeguarded
- Compliances with regulatory laws, company policies and procedures are ensured
- Employees are motivated and work towards a common goal (company objective)
How is Internal Audit different from a statutory audit?
|Internal Audit||Statutory/External Audit|
Does Internal Audit add to/increase the expense of the company?
- Internal audit is not an expense but an investment. This is true for any business because it is a source of new knowledge that can be used to improve the efficiency of the business.
- Internal auditing is an effective way of ensuring that your business is on the right track and that your business is maximizing its growth potential.
Which functions can be audited by an Internal Auditor?
All business functions including:
- Inventory Management
- Human Resources
- Accounts and Finance
- Information Technology