Internal auditing is the evaluation of internal controls of the company, the risks involved in financial reporting and bookkeeping as well as data collection and regulatory compliance. An internal auditor reviews every aspect of the company from management’s ethics to the effectiveness of strategies applied for operating activities in different departments. It is the internal auditor’s responsibility to identify inefficiencies in the company’s controls, policies and procedures implemented, and the financial systems. After the evaluation and analysis, the internal auditor is required to prepare financial reports as well as tactics and strategies for improving the internal controls and management of the business. A comprehensive analysis is provided identifying the areas that need enhancements and refinement in order to minimize inefficiencies and risks.
An internal auditor is appointed by the auditing committee who then presents the reports prepared by the internal auditor to the board of directors (BOD). An internal auditor’s opinion is independent of any sort of undue influence since they are directly answerable to the audit committee. Even the package for internal audit is defined by the audit committee so no intimidation or self-interest threats are involved.