Modern commerce and growth often bring complexity and as organisations start to scale, they can become intricate machines with thousands of moving parts – from financial transactions to IT systems or human resource protocol. So identifying every potential inefficiency or risk becomes an impossible task for the management or the leadership to handle alone and this is exactly where an internal auditor steps in to help.
An internal auditor is often described as the eyes and ears of senior management or leadership, and these professionals provide the oversight that is necessary to keep a company’s integrity completely intact. If you have ever wondered, “what does an internal auditor do?” – the answer lies in their unique capability to peer into the soul of an organisation as well as fix problems before they even reach the public eye.
Defining the Internal Auditor
An internal auditor is a professional authorised to review business records in order to ensure that regulatory compliance is met and information is secure. Unlike a standard accountant who only focuses on recording financial history, the role of an internal auditor is different and more proactive or strategic.
They do not just look at what has happened, they look at what could happen, and at its core, an internal auditor is an independent objective assurance and consulting activity designed to add value to an organization, so whether one is employed by private corporations or government entities – an internal auditor is a complete professional who uses a disciplined approach when evaluating and improving the governance & risk management processes of their employer.
Internal vs. External Auditor
People often confuse internal and external auditors. It is important to remember that their missions are completely distinct. An external auditor is a 3rd party who is hired to confirm the accuracy of financial statements for investors as well as lenders. On the other hand, internal auditors are employees of an organisation who work all year in order to improve the organisation’s internal health.
While internal and external auditors both examine data, the internal auditor must focus on the company as a whole, including IT contracts, environmental policies, operational efficiency, etc. Because they are on the inside of the business, internal auditors often have the freedom to offer advice and act as internal consultants, to help businesses grow at scale, which is a practice often restricted for external firms in order to avoid conflicts of interest.
The Audit Process: How Internal Auditors Work
The internal auditing process is more systematic, and it goes beyond simple spreadsheets. It actually requires a blend of investigative curiosity along with technical inspiration, and in order to truly learn what does an internal auditor do, one must look at the diverse internal audit activities they need to perform daily.
1. Risk Assessment and Planning
Before any audit begins, the head of the internal audit or the audit committee helps define the scope of the work. In this stage the audit team identifies high-risk areas for example, a new software implementation or a complex supply chain in order to determine where oversight is most needed.
2. Evaluating Internal Controls
A large part of an internal auditor’s work involves evaluating internal controls, which are the safety nets that are designed to amp down fraud and make sure accurate reporting is being done. Auditors perform these types of tests to assess the effectiveness of internal safeguards, and if they find a gap, the internal auditors’ work includes recommending ways to bridge it.
3. Gathering Evidence
Next comes gathering evidence during the fieldwork stage. Internal auditors review different documents, analyse data and engage in interviewing key personnel in this stage. The auditors make sure that they understand the actual workflow versus the documented internal policies.
4. Reporting and Follow-up
In the end, the internal audit function is made to produce audit reports for senior management. These reports tend to highlight the sufficiency and suggest improvements; however, the job does not end with a report because internal auditors also need to track recommendations to make sure that the company actually implements the changes that are suggested
The Internal Auditor Job Description
The modern internal auditor job description is very much broad because it comes with specific duties that differ from industry to industry, and most internal auditors perform the following core functions
- Compliance Audits – Internal auditors need to verify that the organisation’s activities actually follow the state and federal laws.
- Data Analysis and Reporting – Internal auditors also need to analyse operational data in order to spot trends or anomalies that could suggest fraud inside the organisation.
- Risk Management – They also help proactively identify any type of threat to company objectives.
- Operational Efficiency – Internal auditors also help look for redundancies in order to help the organisation save time and money.
- Investigating Misconduct – Internal auditors also act as investigators. So, when signs of internal fraud or unethical behaviour come up, they can mitigate it without delay.
How to Become an Internal Auditor?
If you want to become an internal auditor, you will need a mix of education as well as specialised grit. There is no simple or single path to becoming an internal auditor, but most employers employ internal auditors who hold at least a bachelor’s degree in accounting, finance or even business.
Step 1: Education and Skills
You need a specific toolkit, and not just a degree. Internal auditors may need intermediate math abilities and they most definitely need superior organisational skills. As they have to work across many departments, they must be excellent in communication and must be able to explain complex risks in simple terms.
Step 2: Gain Experience
Many internal auditing jobs require years of internal audit experience or time spent in an entry-level finance position and this is where internships can help you. Internships are a great way to learn what an internal auditor does in the real world setting
Step 3: Certification (The Gold Standard)
Next, you need certification. While you can start a career as an internal auditor with just a degree, obtaining a CIA certification can often be considered as a gold standard. In order to become a certified internal auditor, you must pass a rigorous exam that is administered by the Institute of Internal Auditors. After you become a certified internal auditor, you can prove your expertise and significantly boost your salary, sometimes by as much as $32,000* compared to non-certified peers.
Some professionals also tend to become a certified public accountant (CPA) or a certified public information systems auditor (CISA) in order to specialise in it or financial reporting.
The Future of Internal Auditing
The future of the internal audit team is now being shaped by technology. Internal auditors typically spend their time reviewing paper trails, but in today’s modern age, professional internal auditors tend to use AI and data analytics to provide foresight rather than depending on hindsight. As companies face new threats like cyber attacks or AI-related risks, the need for an internal auditor who actually understands these digital landscapes is more in demand.
The Institute of Internal Auditors continues to update standards in order to make sure that internal auditors monitor these types of emerging risks effectively. So, whether it is assessing the effectiveness of internal controls in a cloud environment or even evaluating internal controls for a remote workforce, modern auditors have access to the most critical layers of a business
Conclusion
So, “what does an internal auditor do?” They keep the organisation honest and efficient. Internal auditors are strategic partners who can help businesses easily navigate the treacherous waters of compliance and risks. Every internal audit team provides a safety net that can protect shareholders, employees, as well as customers and they make sure the integrity of financial reporting along with the effectiveness of internal controls are maintained.
For those with an analytical mind and a passion for “getting it right”, the role of an internal auditor offers a rewarding & a dynamic career path. If you’re looking to hire internal auditors for your firm or want to become a certified Internal auditor yourself, the most important factor of this role is to understand that internal auditors are the silent protectors of the corporate world who make sure that businesses grow effectively, safely and ethically.
For companies that are operating in regulated markets such as the UAE, a strong internal audit function is absolutely essential in order to achieve long term stability. Professional advisory firms like Xpert Tax can help businesses like yours to establish a completely robust internal audit framework and evaluate your internal control systems to make sure compliance.
FAQs
1) What is the actual objective of an internal audit?
The actual objective of an internal audit is to evaluate internal controls, risk management, as well as governance processes to help make sure that compliance and operational efficiency are up to the mark
2) Is an internal audit really mandatory for businesses in the UAE?
Internal audit is not mandatory for all companies, but many organisations need to implement it in order to strengthen their compliance risk monitoring as well as their financial oversight
3) How can an advisory firm help support audit functions?
An advisory firm can help businesses design internal audit frameworks, along with reviewing internal control systems to make sure that regulatory compliance is followed through structured risk-based auditing.
