Internal auditors

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes[The Institute of Internal Auditing]. An internal auditor (IA) is a trained professional tasked with providing independent and objective evaluations of a company's financial and operational business activities. They are employed to ensure that companies follow proper procedures and function efficiently. Final reports are presented to senior management and can include recommendations. The main job of an internal auditor (IA) is to identify problems and correct them before they are discovered during an external audit by an outside firm or regulatory agencies, such as the Securities and Exchange Commission (SEC). One of the roles of the SEC is to regulate how companies report their financial statements to help ensure that investors have access to all of the necessary information before investing. An internal audit generally performs the three tasks outlined below. Assess any risks and internal controls within a company. Ensure that a company and its employees comply with federal and state laws and regulations. Make suggestions as to what needs to be done to rectify a failed audit or issues identified as problematic during the audit. Internal auditors typically perform many tasks to achieve this goal, including examining financial statements, expense reports, inventory, financial data, budgeting, and accounting practices, and creating risk assessments for each department. Detailed notes are taken, interviews with employees are conducted, work schedules are supervised, physical assets are verified, and financial statements are scrutinized to eliminate potentially damaging errors or falsehoods and find ways to boost productivity. Once an internal auditor has completed the examination, the findings are presented in a formal report. The audit report describes how the audit was done, what it discovered, and, if necessary, suggestions for improvements. It is usually presented to senior executives at the company. If changes are recommended, it's common for an internal auditor to be asked to complete a follow-up audit to determine how well the advised changes have been executed. Properly managed publicly traded companies also carry out internal audits to ensure that the company is complying with federal and state regulations, including those mandated by the SEC. However, companies must also ensure that their accounting practices follow the guidelines laid out by the Generally Accepted Accounting Principles (GAAP)[Investopedia].

Sources:

Definition of Internal Auditing. The Institute of Internal Auditing. Retrieved from: https://www.theiia.org/en/standards/what-are-the-standards/definition-of-internal-audit/

Internal Auditor : Definition, Process, and Example. Investopedia. Retrieved from: https://www.investopedia.com/terms/i/internalauditor.asp