Internal Control and Internal Auditing in Businesses

Many SMEs generally do not spend time on “Internal Control” and “Internal Audit” andtry to solve every problem on their own. On the other hand, it is another fact that the average life span of these enterprises is about 20-25 years.

In light of these data, shouldn’t businesses give more importance to internal control and?internal audit consulting firms in India?to institutionalize and ensure continuity in their operations? At least as much as the importance they give to their other daily operations!

Here, we would like to talk about some “known misconceptions” about internal control and internal audit that experts have experienced in the field.

1. Establishing an Internal Control System/Having Audits Is an Expensive Investment: Wrong!

Foremost, it is seen that conducting internal audits is a cheap investment when compared to the total added value it can add to the business.

What can be added values? To:

• manage the business at the right time with the right decisions,
• ensure efficiency and savings in operations,
• prevent abuses,
• avoid possible penalties as a result of compliance with the law.

Now, with?internal auditing consulting services in India,?companies can have internal audits by allocating less budget and take the first step quickly with the help of experts in the field.

2. Internal Control and Internal Audit Are the Same Things: Wrong!

Internal control is the set of systems designed to remove the obstacles to the achievement of the company’s goals and to ensure that the goals are achieved. Internal control and effective control activities are implemented through activities such as determining duties and responsibilities with borders and arranging authorities.

However, on the other side, an internal audit is the measurement of how effectively the internal control system works with planned or surprise audits during certain periods. To put it in another way, an internal audit examines and measures at what level the internal control system can prevent risks.

3. Managers do better internal control: wrong!

Personalized controls can change according to the person’s daily mood! As a result, different solutions or deadlocks can be produced for similar problems at different times. In task changes, the new “manager” may even want to reverse the whole process and apply different processes!

However, in enterprises where internal control culture is present and systematic operation is ensured by someone who has the required specialization the continuity and accuracy of the business can be ensured and there will be no surprises.

4. The work of the company should not be supervised or there should be no outside interference in the business: Wrong!

On the contrary, it is much more useful to inspect the whole operation of a company from the outside with an experienced eye.

Internal audits made by independent, experienced people can end the business blindness, eliminate risks, and offer the business “savings”, “effectiveness” and “alternative ways of doing business”.

Internal audit is the activities that aim to protect the health and continuity of the enterprise, where the efficiency of the built internal control system is measured, not the individuals.

One more thing that should not be forgotten is that internal control and internal audit make significant contributions to small or large enterprises and in all new or mature operations.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

Posted by

Aman Aggarwal

AKGVG & Associates