Internal audit

Definition

An internal audit 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 evaluate and improve the effectiveness of risk management, control, and governance processes.

Internal auditing is a catalyst for improving an organization’s effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice.

Professionals called internal auditors are employed by organizations to perform the internal auditing activity.

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The Securities and Exchange Act of 1934, as amended by the Foreign Corrupt Practices Act of 1977, is one measure that requires adequate internal control systems for private companies. This law requires that every company issuing securities registered with the Securities and Exchange Commission have a system of internal accounting controls. These controls should provide reasonable assurance that assets are safeguarded and that records accurately reflect the transactions and disposition of these assets.

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