Internal auditing is an independent operation that is developed and executed in-house by a company to provide quality and compliance checks. Internal auditors are responsible for this job. Although traditionally, internal auditors focused primarily on accounting and finance, their role has evolved to include other responsibilities within an organisation. In growing your business, you will have to work with more people such as your employees, vendors, or partner(s).
As a result, you may not be able to check everyone’s work for quality or compliance with both internal and external regulations as much as you want to. That is why you need someone to ‘trust but verify’ what goes on in-house. Here are some reasons why it is important to hire an internal auditor.
Even though they are technically employees of your business and report directly to the management, internal auditors can inspect the work of everyone, including management itself. They act as independents who provide unbiased reports about the performance of the entire company. By acting as your auditor you risk falling into a conflict of interest – you may not be completely honest with yourself – which may very well hinder the growth of your business.
Prevention and Protection System
Much like a network firewall, an internal auditor acts as a defence mechanism to prevent any misuse of company assets, fraudulent financial activities, and noncompliance with regulations. Internal auditors build and implement strong systems to appraise business processes.
When employees and vendors know that your company is serious about internal control, they will be discouraged from indulging in any activity that may lead to dismissal. This prevention system, in turn, acts as a protection system. As part of your protection system, consider getting a business insurance policy.
A business insurance policy protects your company (and you personally) from any liability and lawsuits that may arise as a result of an employee’s actions, liabilities that are beyond your control and protects your business generally. There are a lot of different options in the market, so be sure to use a business insurance wizard to help you make an informed decision.
Finance is one of the most sensitive and crucial aspects of running a business. Its mismanagement could easily lead to lawsuits, ruined reputation, bankruptcy, or worse, lead you straight to jail. While there may be employees with ill intentions to defraud your company, others may simply not be aware that they may be doing something wrong.
An internal auditor will educate your employees on the dos and don’ts of accounting to remain in compliance with internal and external regulations. Beyond that, they will regularly and randomly check all financial dealings of the company for compliance.
For a business to grow, there needs to be enough room for innovation. The company needs to be able to seize opportunities to stay ahead of market competition. However, with each new opportunity comes new risks. The job of an internal auditor is to find the right balance between internal control and risk management that would not hinder the company’s objective of growth.
The success of every business depends on its human resources. Internal auditors are very much a crucial part of that success. Without them, everything you’ve built could come crumbling down. If you want to grow your business, hire an internal auditor to provide an objective view and grow your business.