Internal Audit Services
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Definition of Internal Audit Services
The Definition of Internal Audit Services states the fundamental purpose, nature, and scope of internal auditing.
Internal Audit Services 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 evaluating and enhancing the effectiveness of risk management, control, and governance processes.
Audits conducted or organized by the management of a business organization to ensure and analyze the efficacy of the business operations is called internal Audit Services in Kenya. It is one of the primary and essential functions of management.
Need for Internal Audit in Kenya
Every Company requires checking the risk management and internal control to improve the condition of the management and to analyze the financial position in the competitive business world.
Need for Internal audits:
- Managing the risks in the organization and taking necessary control measures to eliminate or eradicate them.
- To enhance the compliance of the Company with the relevant provisions and laws.
- To create transparency in governance and management.
- To focus on the risk management process for understanding all the possible risks an entity has exposure to.
- For checking the intensive use of the information and technology in the Company.
- For checking the complexities in the business.
- To establish proper, efficient, and sound corporate governance.
Audits under Internal Audit Function
Specific audits are related and covered under the Internal Audit services in Kenya function. These have been inseparable and must be conducted to get maximum benefits of the Internal Audit. These audits are as follows-
The areas covered while performing an operational audit are evaluating the sufficiency of the operative internal controls, checking the compliance of the business activities with the regulations, internal policies, and industry standards, and ensuring the efficiency and consistency of the procedures and processes in the Company.
Accounting and Financial Reporting Audit
While conducting an Internal Audit, it must be aligned with the organization’s financial reporting and accounting function. This audit covers essential checking of the financial statements, books of accounts, and related reports. 2Max Group performs to assure the shareholders that all the profits and losses and other transactions shown by the Company are accurate and fair.
This type of Internal Audit is conducted to check the performance of the Company under the set objectives and aims. A proper evaluation of the actual performance and working of the Company is to be ensured.
Information Technology Audit
The Information Technology Audit, or as it is popularly known, IT Audit, is conducted for a complete assessment of the information system used by the Company, its accuracy, and to check whether it is operating securely or not. Also, these are done to ensure compliance with the mandated provisions and regulations.
What is the Process involved in the Internal Audit services Function?
The Process involved in the internal audit function has the following essential steps-
- The auditor must establish and communicate the internal audit’s scope and objectives to all the management members.
- Reviewing and understanding the complex critical areas of the business is to be undertaken by the auditor. This is done by conducting in-person interviews with the members or reviewing the necessary documents.
- Keeping within the limits of the scope of the internal audit, the auditor has to describe all the key risks the business faces.
- Then the auditor must ensure that the internal control methods are ethical and efficiently combat and counter the risks.
- With the help of the samples that are risk-based, the auditor with the help must test the controls of the management to ensure their performance as per estimation.
- Next, the auditor has to report all the problems and issues so that the management can address them. Also, they have to identify any upcoming challenges in the business and then, collectively with the management, must negotiate potential plans for these concerned aspects.
- The auditor must prepare a finalized or internal audit report to express their viewpoint.
An Internal Auditor is a trained and skilled professional employed or appointed by a company to provide a complete evaluation of the organization’s business operations, corporate governance process, and financial objectives. An Internal Auditor works independently without any prejudices. Since the business world is continuously changing and upgrading, therefore, there is a need for continuous improvement in the core competencies of today’s internal auditors must also be ensured.
What are the Duties of Internal Auditor?
The key responsibilities of an internal auditor include the following:
- Objectively assess a company’s IT and business processes
- Investigating any fraudulent transactions and forgery in the Company.
- It has to provide safeguards for assurance.
- To ensure compliance of the organization with the prescribed statutes and relevant provisions.
- To identify the gaps and the shortcomings in all the entity’s processes.
- The internal auditor has to help the Company identify improper conduct and behavior and promote an ethical environment.
- To communicate all the findings and provide their viewpoints and recommendations.
- We are evaluating the internal control measures and making necessary recommendations for improving them to make them more efficient and effective.
- Providing a qualified or unqualified or disclaim or adverse opinion that is independent.
- Assessing the risks in the Company and the efficiency of the risk management process.
Internal Audit report:
Once the Internal Audit is concluded, the internal auditors must analyze and interpret all their findings while conducting the audit. They have to summarize these in a report along with their viewpoint and recommendations or any action plans that can be fruitful for the Company. This report is called an Internal Audit Report which has to be provided to the management of the Company.
What areas are typically covered under Audit Services in Kenya?
An internal Audit is also called a Management Audit because it is conducted at the behest of the Company’s management. Here, the focus is entirely different than that of a Tax Audit or Statutory Audit.
Typically, the following areas are covered under Internal Audit Services:
- Review systems and procedures applicable to the organization and provide suggestions for improvement.
- Review of adequacy and effectiveness of Internal Controls.
- Physical examination and verification of stock, tangible assets, and cash treasury.
- Examine internal policies/ guidelines prescribed by the management for the Company, its compliance, and reporting of variances, if any.
- Review all statutory and legal compliance applicable in the case of branch and reporting of deficiency, if any.
- Review adherence to standard auditing procedures and report its deviation, if any.
- The head office provides an Internal Audit Checklist.
What are the benefits of availing of Internal Audit Services in Kenya?
Since the business world is more competitive, it has become significantly more valuable and essential that business firms get all the aspects and critical areas of the entity evaluated to be updated at all times. Conduction of an internal audit ensures that it is achieved. Following are the possible benefits of availing of Internal Audit Services in Kenya:
- The Company is provided with objective assurance.
- A disciplined approach is brought to the organization’s operation and work.
- It provides key recommendations and suggestions for bringing significant changes that improvise the business entity’s operations.
- Also, it helps the organization accomplish all its set objectives and goals.
- It improvises the governance process in the corporate.
- Detailed insight into the business module of the Company is being provided.
- It introduces a systematic approach to managing the risk and the internal control measures.
- It helps improve the efficiency and effectiveness of internal risk management and control methods.
- The senior management is provided with valuable insights.
- For detection of fraudulent operations in the internal and upper levels of the firm.
It means the policies, rules or regulations, procedures, and processes that a business enterprise uses to operate and direct business activities for achieving its goals and to protect the interests of its members and shareholders. In the internal audit function, the auditors help the management to get an insight into the key areas and how to work more responsibly.
The auditor ensures the effectiveness of the management of the involved risks. Here the monitoring and evaluation of the strategic stakes are to be done. Also, the financial dangers are given preference as the growth of the business depends on the monetary profits or losses at the core, inclusive of other factors as well. This helps in the betterment of the operations of the Company.
The primary objective of conducting the audit is to evaluate the internal control methods used by the entity. These controls protect the Company from fraud, forgeries, or any major downfall.
How can we help as Internal Audit Consultants?
Typically, internal audit consultants have to review the department’s procedures and observe the employees and their work. Though they are not responsible for the managerial or decision-making Process of the department or the organization, they still have to provide suggestions and advisory on making changes that help improve the department’s operations. They work closely with the managers of various departments to assist with the training part of the employees.
Our Approach to Internal Audit Services in Kenya:
We, 2Max Group, as trusted Internal Audit Consultants help our clientele with several services under the internal auditing function. The services included are as follows:
- Analysis of current internal control processes and their effectiveness.
- Analysis of various policy documents available and suggesting changes or implementation of new policy documents.
- Evaluation of the corporate governance structure.
- Development of plans for the Company based on risks.
- Designing tools for cost-effectiveness and cost reduction
- Understanding various processes and giving suggestions for improvement
- Assisting the staff to chisel their functional and mental skills for higher productivity and unpredictable efficient results.
- Advise the clients on all the key activities and core operations that are important and reliable to the business’s operations.
- We are developing measures of internal controls that are workable and enhance the controlling environment of the Company.
- Advising the management about the operational field’s risks improves risk control management.