Internal Audit Challenges and Complications

Internal Audit Challenges and Complications

Internal audit it’s a corporate necessity, a regulatory requirement, a business requirement, and a corporate compliance requirement. Internal audit is basically an evaluation of the effectiveness and efficiency of the internal control systems in place to mitigate risks and achieve organizational goals. In order to carry out this assessment, auditors examine the processes and systems from multiple perspectives such as financial reporting risk (reliability of financial statements), process improvement opportunities (efficiency or effectiveness), fraud risk management, information technology governance (IT) policies and procedures (data security) etc. The findings of this assessment are then communicated to the management of an organization who decides on how to take action based on these findings.

The internal audit field is facing several challenges today due to global economic conditions and advancement in the field of technology. Some of the challenges and complications faced by internal audit function are as follows:

Internal Audits can be a Cost Center

  • For internal auditors, it’s important to remember that the existence of your department is entirely dependent on its value as a cost center. This means that you have to be able to justify your department’s expenses and show how they directly benefit the company’s bottom line. If you can’t do that, then there won’t be an internal audit department because it will cease to exist.

    So if internal audit is a cost center, what does that mean for you? You need to prove your worth! Your department needs to be efficient and effective in order to maximize the benefits of internal audits while minimizing the associated costs.

Internal Audits and Online Security

Internal audits are a critical component of an organization’s risk management strategy. They are part of the COSO framework, which is used to assess and mitigate risk in the following ways:

  • Compliance with applicable laws and regulations
  • Internal controls over financial reporting
  • Financial stability or strength of your enterprise

Effective internal audits require complete adherence to established processes. Online security protocols must be in place to ensure that privileged information remains confidential, accessible only to authorized individuals who have been granted permission from appropriate levels of authority within the organization.

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