Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The internal audit procedure typically involves the following steps:
- Planning: The internal audit process begins with planning, which includes identifying the objectives, scope, and resources needed for the audit.
- Risk assessment: The next step is to assess the risks associated with the activities being audited. This includes identifying potential risks to the organization and assessing the likelihood and potential impact of those risks.
- Auditing: The actual audit process includes performing fieldwork, which includes testing and evaluating the controls in place to manage the identified risks. This may include reviewing documents, interviewing employees, and observing processes.
- Reporting: After the audit is complete, the internal auditor will prepare a report outlining the findings and recommendations for improvement. The report is then presented to management for review and action.
- Follow-up: A follow-up review is conducted to ensure that management has taken appropriate action on the recommendations.
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