What is internal audit?
In essence, internal auditors help their organisations to manage risks. They keep senior-level executives up to date on key questions such as whether risks have been identified and how well they are being managed. They deal with issues that are fundamentally important to modern organisations. They look beyond the narrow focus of financial statements and financial risks to consider wider issues such as the organisation’s reputation, its impact on the environment and the way it treats its employees.
Internal auditors have to be independent people who are willing to stand up and be counted. Their employers value them because they provide an independent, objective and constructive view. To do this, they need a remarkably varied mix of skills and knowledge. They might be advising the project team running a difficult change programme one day, or investigating a complex overseas fraud the next.
From very early on in their careers, they talk to executives at the very top of the organisation about complex, strategic issues, which is one of the most challenging and rewarding parts of their role.
What is the difference between internal and external audit?
Internal auditors are often confused with external auditors, but there are significant differences between the two groups. Internal auditors look at all the risks facing an organisation and what is being done to manage these risks. External auditors on the other hand look at financial accounts. So internal audit’s role is broader and might for example include auditing the reputational risk that a company could be damaged by using cheap labour in foreign countries, or operational risks such as poor health and safety procedures, or strategic risks such as the board stretching company resources by producing too many products.
Knowledge and standards
Internal auditors follow professional standards that advise them how best to perform their work. The International Standards for the Professional Practice of Internal Auditors is a global framework produced by the Institute of Internal Auditors, which is followed by 160,000 internal auditors worldwide. To view the document, please click the link below.
Code of Ethics and International Standards