Corporate Internal Audit Unit (SPI) it is an independent work unit formed within an organization or company to carry out objective internal supervision.
The company's Internal Audit Unit plays an important role in ensuring that all business processes run in accordance with regulations, operational standards, and principles good corporate governance (good corporate governance).
In maintaining transparency and accountability, SPI is at the forefront in detecting and preventing potential irregularities, fraud, and inefficiencies in the company's operations.
SPI also serves as a strategic partner of Management in improving the effectiveness of internal control and risk management.
The main purpose of the establishment of the company's Internal Control Unit is to provide assurance that the organization's activities are carried out in an orderly, efficient manner, and in accordance with the established objectives.
Through systematic internal audits, SPI helps create a more transparent, accountable, and high integrity work environment.
Check out this article which will discuss the roles, duties, and SOPs of the company's Internal supervisory unit that must be known.
What is SPI?
Internal control system (SPI) is a set of policies, procedures, and mechanisms designed and implemented by the company's management to provide adequate guarantees in achieving organizational goals.
The company's Internal Audit Unit is a comprehensive framework that regulates how business activities are carried out, ensuring the reliability of financial reporting, operational effectiveness and efficiency, and compliance with applicable regulations and policies.
In the corporate context, SPI is not only limited to financial control, but also includes operational, governance and risk management aspects.
The company's Internal Audit Unit is an important foundation for good corporate governance (Good Corporate Governance) and act as the first defense system in identifying and mitigating various business risks.
The main functions of SPI in the organizational structure
The company's Internal supervisory unit has several crucial functions in the company's organizational structure, including:
- Supervision and Evaluation – SPI is in charge of supervising the company's operational activities and evaluating the effectiveness of the controls that have been applied. This helps management in identifying areas that need improvement.
- Risk assessment-SPI helps companies in identifying, analyzing, and managing various business risks that may be encountered. This function ensures that the company has taken adequate preventive measures.
- Compliance and verification-SPI ensures that all company activities have been carried out in accordance with standard operating procedures (sops), internal policies, and applicable legal regulations and provisions.
- Asset protection-SPI plays a role in protecting the company's assets from various forms of misuse, theft, or damage through the implementation of effective control systems.
- Consultation and recommendation – SPI provides inputs and recommendations to management for improvement of business processes and strengthening of internal control systems.
Difference between SPI and Internal Audit and Audit Committee
Although often closely related, SPI, Internal Audit, and Audit Committees have different scopes and responsibilities:
- SPI vs Audit Internal
- SPI is the overall control system and process implemented in the organization, while Internal Audit is the function that evaluates the effectiveness of SPI.
- SPI is implemented by all levels of the organization in day-to-day operations, while Internal Audit is a special unit or department that is in charge of conducting checks independently.
- SPI is preventive and runs on an ongoing basis, while Internal audits are more detective and are conducted periodically or based on need.
- SPI vs Audit Committee
- SPI is an operational system implemented by management, while the Audit Committee is a committee formed by and responsible to the Board of Commissioners.
- SPI focuses on the implementation of controls in day-to-day operations, while the Audit Committee serves to oversee the financial reporting, audit, and compliance processes more strategically.
- The SPI is run by all levels of the organization, while the Audit Committee is usually composed of independent members who have expertise in finance, accounting, or auditing.
These three components work synergistically in creating good corporate governance, with SPI as the cornerstone of control, Internal Audit as the evaluator, and the Audit Committee as an independent supervisor that ensures the integrity of financial reporting and organizational compliance.
See also: What Is Internal Audit? This is the task, type and size of the salary!
Duties and responsibilities of SPI
1. Conduct supervision and Evaluation
The company's Internal Control Unit has the main task of carrying out comprehensive supervision of all company activities.
In carrying out supervisory functions, SPI focuses on monitoring operational and financial policies that have been established by management. It includes the evaluation of business processes, work procedures, to the implementation of strategic decisions of the company.
The company's Internal Control Unit also plays an important role in assessing the effectiveness of internal controls that have been implemented.
Through a series of tests and analyzes, SPI evaluates whether the existing control system has been running according to design and is able to effectively mitigate risks.
This assessment includes examination of documentation, verification of transactions, and direct observation of the implementation of operational procedures in various departments.
2. Maintain Regulatory Compliance
The compliance aspect is the main focus in the duties of the company's Internal Audit Unit to ensure that the company always complies with applicable laws and regulations. SPI conducts regular monitoring of regulatory changes and ensures that the company's activities are in line with the latest legal provisions. This function is vital in preventing companies from risking sanctions, fines, or other legal consequences due to non-compliance.
In addition, SPI is responsible for identifying and mitigating legal risks that the company may face. Through systematic risk analysis, the company's Internal Control Unit helps the company anticipate potential regulatory violations and provide recommendations for preventive measures that need to be taken. This proactive approach enables companies to manage compliance risks more efficiently and sustainably.
3. Provide Repair Recommendations
One of the crucial responsibilities of SPI is to prepare a comprehensive and accurate monitoring report.
The report includes not only the findings and discrepancies found during the audit process, but also an analysis of the root causes and their impact on the achievement of the company's objectives.
Professionally prepared reports are the basis for management in making strategic decisions.
Based on the findings and analysis carried out, SPI provides constructive input for the improvement of business processes. The recommendations provided are applicative and solution-oriented, taking into account operational efficiency, control effectiveness, and resource optimization.
Through targeted recommendations, SPI contributes significantly to improving performance and corporate governance.
4. Preventing and detecting fraud
In an effort to maintain the integrity of the company, SPI plays an active role in identifying potential fraud or fraud.
By applying a risk-based audit methodology, SPI conducts an examination of areas prone to fraudulent practices such as procurement, finance, and asset management.
Early detection of signs of fraud allows companies to take preventive action before greater losses occur.
The company's Internal Audit Unit also coordinates closely with other work units when conducting internal investigations.
Collaboration with the legal, human resources, and Information Technology departments is essential in the process of collecting evidence, forensic analysis, and handling fraud cases.
This integrative approach ensures that investigations are conducted thoroughly, objectively, and in accordance with applicable procedures, resulting in accountable conclusions.
Standard Operating Procedure (SOP) Internal Audit Unit
In order for the supervisory function to run effectively and consistently, the company's Internal supervisory unit requires Standard Operating Procedure (SOP) clear and structured. This SOP is a guideline in every stage of supervisory activities, from planning to follow-up on audit results. Here are the main stages in the SOP of the company's Internal supervisory unit:
1. Supervisory Planning
The initial stage of supervision begins with a thorough planning process. Internal Audit Unit of the company needs to do:
- Identify areas that require supervision: SPI analyzes areas that have a high level of risk, have a major impact on business continuity, or have the potential for irregularities.
- Preparation of annual audit plan: Based on the identification results, SPI prepares an annual audit plan containing a list of monitoring priorities and their implementation schedules.
2. Implementation Of Supervision
After the plan is prepared, the company's Internal Audit Unit conducts supervision in accordance with the established audit methodology, through:
- The process of collecting data and evidence: Data is collected through observation, document review, and relevant information systems to ensure the accuracy and validity of the information.
- Interviews with related parties: SPI conducts interviews with relevant units or individuals in order to obtain additional information that supports the audit process.
3. Preparation Of Reports
The results of supervision are then summarized in the form of audit reports, which include:
- Documentation of supervision results: All findings, evidence, and analysis are systematically recorded for internal reporting and archival purposes.
- Recommended remedial action: Based on the audit results, SPI provides strategic recommendations aimed at correcting deficiencies and improving the performance of the audited units.
4. Follow-up and Monitoring
After the report is submitted, the company's Internal Audit Unit continues the process with:
- Evaluation of the implementation of recommendations: SPI assesses whether the recommendations given have been implemented effectively by the relevant parties.
- Preparation of a sustainable surveillance strategy: To ensure continuous improvement, SPI designs a long-term surveillance strategy based on previous findings and the company's risk dynamics.
By following the SOP, the company's Internal supervisory unit will carry out control functions systematically and can also assist the company in creating a work culture that is compliant, transparent, and oriented towards continuous improvement.
See also: Quality standards of Internal Audit Reports and its important components!
Benefits of the existence of SPI for the company
The existence of the company's Internal supervisory unit provides a significant strategic contribution in supporting the continuity and growth of the company. By carrying out the internal audit function professionally and independently, SPI assists management in identifying and addressing various operational, financial, and compliance risks.
Here are some of the main benefits of the company's Internal Audit Unit for companies:
1. Improve Operational Efficiency
The company's Internal Audit Unit evaluates the company's business processes and operational systems as a whole. Through regular internal audits, SPI is able to find gaps in inefficiencies, overlapping procedures, or non-optimal use of resources. Recommendations provided by the SPI can be the basis for drawing up improvement measures so that the company's operations become more effective and cost-effective.
2. Prevent financial and legal risks
One of the important roles of the company's Internal Control Unit is to supervise compliance with regulations, accounting standards, and internal company policies. By early detection of potential irregularities or fraud, SPI helps companies minimize the risk of financial losses, legal penalties, or reputational damage that could arise from violations.
3. Maintain Trust Stakeholders
Internal audits conducted by SPI demonstrate the company's commitment to transparency and accountability. This is very important in building and maintaining the trust of various parties, including investors, business partners, customers, and regulators. The higher the level of stakeholder confidence, the stronger the company's position in market competition.
4. Optimizing Corporate Governance
The company's Internal Audit Unit plays an active role in supporting the implementation of the principles Good Corporate Governance (GCG), such as integrity, responsibility, accountability, and Justice. With strong internal supervision, the decision-making process in the company becomes more objective and based on valid data, thus creating a professional and sustainable governance structure.
The existence of the company's Internal Control Unit will provide the above benefits and can be one of the key elements in creating a healthy, competitive company, and able to grow sustainably in the midst of dynamic business challenges.
Conclusion
The company's Internal Audit Unit plays a vital role in maintaining the stability, integrity, and performance of the company. Through an independent and objective internal audit function, SPI assists management in identifying risks, optimizing business processes, and ensuring compliance with company regulations and policies.
In order for the company's Internal Control Unit to work optimally, the implementation of Standard Operating Procedures (sops) that are structured, systematic, and oriented to continuous improvement is required.
A good SOP will support the company's Internal supervisory unit in carrying out supervisory duties, from planning to follow-up, more effectively and efficiently.
With increasingly complex business challenges, companies are required to have a stronger and adaptive internal supervision system.
Therefore, it is important for every organization to continue to strengthen the role of the company's Internal Audit Unit, improve the internal audit process, and build a transparent and accountable work culture to achieve the company's long-term goals.
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