Internal Audit
An independent evaluation function within an organization reviewing operations, controls, and risk management to improve governance processes and business practices.
Internal Audit
An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations, helping it accomplish objectives through a systematic, disciplined approach to evaluating and improving risk management, control, and governance processes.
For example, an organization’s internal audit department might examine procurement processes to evaluate adherence to policies, assess control effectiveness, identify inefficiencies, and recommend improvements to reduce costs and fraud risks while enhancing compliance.
Unlike external audits focused primarily on financial statement accuracy, internal audits cover diverse objectives including operational efficiency, compliance, risk management, data reliability, asset safeguarding, and fraud detection. Internal auditors typically report functionally to the audit committee and administratively to senior management, maintaining organizational independence while remaining employees. Following Institute of Internal Auditors’ standards, audits typically include planning, fieldwork, reporting, and follow-up phases, with findings and recommendations communicated to management. Modern internal audit functions increasingly adopt risk-based approaches, focusing resources on areas of greatest strategic importance and risk rather than routine cyclical audits of all functions.