What is Internal Audit System?
A good internal quality audit system is a fundamental element of ISO 9001. In essence, it can be considered as a self-assessment or analysis to ensure internal procedures are being followed and compliance with ISO 9001 is maintained at all times. An organization’s management can develop an independent audit team within the entity or use outsourced internal audits through a third party. This will ensure regular check on internal procedures and drive continual improvement.
As mentioned by the Institute of Internal Auditors (IIA) internal audit is “an independent, objective assurance and consulting activity designed to add value and improve on an organization’s operations”. Consequently, it implies the fact that internal audit allows an entity to attain its objectives by presenting a structured approach to evaluating effectiveness, increasing risk management, and examining business practices.
To answer the question ‘what is an internal audit system?’, it is the entire structure and management of audits within an organization. E.g., which departments to audit over a year’s period and how the audits are conducted.
Key Objectives of a Good Internal Audit System
When it comes to the key objectives of a good internal audit system, there are a few that should be considered. One of the key objectives of a good internal audit system, is maintaining proper control over every activity and processes carried out.
There is no doubt that every organization face risks such as health and safety risks, dissatisfactory customer experience, supplier issues and information security breaches amongst many others. Another of the key objectives for internal audits is establishing the areas of risk within the scope of the audits. The effective management of those risks is a critical factor in the success of an organization, in order to stay ahead of competitors and complying with stakeholder’s requirements and demand. The internal auditor will evaluate the risk management processes and systems of internal control to assess effective risk management in the overall organizational practices.
Considerations When Conducting Internal Audits
In addition to the above, making recommendations where weaknesses or areas of improvements are observed is also a fundamental objective of an internal audit system. The knowledge of the internal auditor about risk management, allows him/her to work as a consultant as well who offers advice and plays the role of a catalyst for improvement in the practices of an organization.
Consider the example of a line manager who is worried about a specific area of responsibility. Here the opportunity of working with the internal auditor could be of assistance in identifying required improvements. In the same way, if a new big project is being started, at this instance the internal auditor can facilitate to make sure that project risks are recognized, evaluated, and actions to address them are managed effectively. Internal audits can reveal the weaknesses, and strengths of the organization when conducted effectively.