Running a successful business is no easy task, but there is nothing more satisfying that when it goes well. Building and developing your own successful company is a truly great accomplishment that anyone would be proud of. But even if your business has managed to become successful that’s not reason to rest on your laurels: it takes plenty more work to ensure it stays that way. As your business grows, diversifies and expands it becomes more difficult to stay on top of every sector. As you outsource overseeing responsibilities to others, various aspects of the business may begin to be run in ways you don’t approve of. Inefficiency and waste can creep into business practices very subtly, with no perceptible change in company policy. The best way to stop these insidious enemies of productivity from getting their way into your business is with an internal audit.
What’s the first word that pops into your head when you hear the word audit? It probably wasn’t a positive one. But audits aren’t just the realm of government agencies trying to take down businesses with red tape: they can also be invaluable for ensuring those very same business are able to streamline their practices and maximize their profits.
Risk AssessmentOne of the preliminary tasks of an internal audit is to conduct a risk assessment. In the process of achieving its business objectives a company may have to undertake processes which contain an element of risk. An internal audit can identify what these risks might be, what their likelihood of occurring is and what their consequences might be if they do. If these risks are identified as possibilities before they even arise, the company will not be taken by surprise and a potential crisis can be averted. By identifying the likelihood of the risk occurring, an internal audit can identify which areas should have the most time focused on them to ensure the risk remains controlled. Time management efficiency is therefore maximised. What are some of the main benefits of an internal audit? Let’s take a look at some of the major ones.
- Identifies inefficiencies: Redundant practices cost money and do not contribute to a company’s bottom line. An internal audit can identify these practices and suggest way they can be eliminated.
- Early Warning System: If undesirable practices are occurring within the company, an internal audit can identify and remove them before the need for outside intervention or regulatory bodies becomes necessary.
- Control Environment: Sometimes, gaps can appear in an organisation’s structure which prevent controls from being properly applied. An internal audit identifies these gaps and ways they can be fixed.
- You make the decisions: The scope of the internal audit is defined by the management of the company. That means the audit will only cover what you deem appropriate, and nothing else.
- Increases accountability: When processes become muddied and less transparent, it can be hard to identify the specific reason for inefficiency. The internal audit can illuminate individuals who are responsible for certain processes as to where they are going wrong.
- Makes the organization process-dependent instead of person-dependent: When processes are undermined by inefficient practices brought in by individuals, overall company efficiency can be affected. The internal audit makes sure the company relies on mandated processes rather than the whims of an individual.
- The report comes to you: The audit is designed to aid your business, so any information gleaned from it is given straight to the management of the company rather than an outside entity.
The information an internal audit can provide is a powerful tool available to the management of a company. An internal audit will not automatically fix the problems within an organisation, but it will identify those problems and provide suggestions for how they might be tackled. An internal audit can provide a comprehensive, detailed, and easy to understand look at the practices of a company: thereby making it easier to identify and improve upon faults. The management that pays close attention to the information provided by the audit will reap the benefits of a deeper understanding of their own business. These helpful tips were brought to you by Auditor Training Centre (link: http://www.auditortrainingcentre.com/).