Internal audit is an activity carried out by a team of internal auditors in an organization to evaluate and ensure the effectiveness and efficiency of the internal control system and risk management.
This process involves examining various aspects of operations, finance and management to verify the performance of established policies and procedures.
In this article, we will explore more about the meaning of internal audit, how it differs from external audit, its tasks, examples, functions, and income. Let's take a look at the information below!
What is Internal Audit?
As explained earlier, internal audit is an objective and systematic activity conducted by a team of internal auditors within an organization.
The primary objective of internal audit is to provide assurance to management that the internal control and risk management systems are effectively implemented and functioning properly.
So, what is the difference between an internal audit and an external audit? The main difference lies in the party conducting the audit.
Internal audits are conducted by a team of internal auditors who are part of the organization itself, while external audits are conducted by independent parties from outside the organization.
What are the duties of internal audit?
To conduct internal audits, auditors must adhere to principles that emphasize integrity, objectivity, and confidentiality.
Special competence is required and application of code of ethics terkait selama menjalankan tugas ini. Dalam kerangka PDCA (Plan Do Check Action), internal auditors have a central role at the "check.”
Here are the duties of an internal auditor in a corporate context:
1. Gather Comprehensive Information About the Auditee
Auditee, which is the institution or company to be audited, must be well understood by the auditor.
Auditors are responsible for gaining a thorough understanding of the company's workings, organizational structure, and related reports.
2. Review Applicable Documents and Requirements
The auditor should conduct a thorough review and examination of each relevant document and requirement.
This step is crucial to understanding each important process and tracking it through the complete document.
3. Plan the Audit Program in Detail
Audits cannot be conducted on the spur of the moment without proper preparation. Before conducting an internal audit, the auditor needs to communicate with the auditee to inform and schedule the audit with the purpose of initiating and evaluating improvements, not just finding mistakes.
4. Create Checklist Audit
Creation of a questionnaire or checklist the audit is an important task for auditors. Checklist This helps auditors and auditees prepare the necessary documents or data to answer questions effectively.
5. Comprehensive System Check
Although there are checklist audits, auditors must remain careful and thorough when examining all aspects of the auditee.
The reason is that internal audits include checks on various areas, including the work environment system, commitment, and consistency of the auditee towards system improvement.
6. Collecting and Analyzing Audit Evidence
In addition to identifying shortcomings that need to be corrected, internal audits also aim to find achievements that have been achieved by the company.
Each finding must be supported by adequate evidence, ensuring the accuracy and reliability of the audit results.
7. Reporting Audit Findings
Any findings in the internal audit process must be reported so that they can be followed up.
In addition, auditors also need to provide a deadline for follow-up to ensure that the problems found can be addressed immediately by the auditee.
8. Monitoring the Auditee
Internal auditors are responsible for monitoring the follow-up of audit results.
This is done to ensure that the auditee implements improvements and changes in accordance with the audit recommendations, and monitoring is done within a predetermined time limit.
What are the types of internal audit?
To better understand what internal audit is, here are the types of internal audit in a company:
1. Financial Audit
Financial Audit aimed at assessing the accuracy and reliability of the company's financial information.
In this type, internal auditors examine financial statements, transactions, and records to verify compliance with accounting principles and company policies.
2. Compliance Audit
Compliance Audit focuses on checking the company's level of compliance with applicable regulations, laws, internal policies, and tax regulations.
3. Operational Audit
An operational audit aims to evaluate the efficiency and effectiveness of a company's operations by reviewing business processes, operational procedures, and resource utilization.
4. Human Resources (HR) Audit
HR audits are conducted to assess the company's HR management practices, including compliance with labor regulations, payroll policies, and performance evaluation systems.
5. Information Technology (IT) Audit
IT audits are conducted to evaluate the security and effectiveness of a company's information systems which involves assessing security policies, access controls, and compliance with IT standards.
How much does an internal auditor earn?
After understanding the meaning, duties, and types of internal audits, you may be curious about the salary of an internal auditor.
The average monthly salary of an internal auditor in Indonesia ranges from Rp6,000,000 to Rp7,500,000, depending on the level of qualifications and responsibilities.
FAQ About Internal Audit
What is internal audit?
Internal audit is an objective, systematic activity performed by an internal audit team within an organization to evaluate the effectiveness of internal control systems and risk management, covering examination of operational, financial, and management aspects.
What is the difference between internal and external audits?
The main difference is who performs it. Internal audit is done by an internal audit team that is part of the organization itself, while external audit is performed by an independent party from outside the organization.
What are the duties of an internal auditor?
Eight duties: gathering comprehensive information about the auditee, reviewing applicable documents and requirements, planning the audit program in detail, creating a checklist for the audit, examining the system comprehensively, gathering and analyzing audit evidence, reporting audit findings with follow-up deadlines, and monitoring the auditee's implementation of improvements.
What are the types of internal audit?
Five types: financial audits (assessing the accuracy of financial information), compliance audits (against regulations, law, internal policies, and taxation), operational audits (business process efficiency and resource use), human resource audits, and information technology audits.
Which principles must internal auditors adhere to?
Internal auditors must uphold integrity, objectivity, and confidentiality, along with specific competence and application of the code of ethics. Within the PDCA framework (Plan Do Check Action), the internal auditor's role sits at the check.
What is the salary of internal auditors in Indonesia?
The amount depends on qualification level, scope of responsibility, professional certifications, industry, and the company's size and location. The detailed ranges can be seen in the salary section of this article.
That's a complete explanation of internal audit along with the role, duties, and income of an internal auditor.
Internal audit has an important role in ensuring that an organization's operations run well, efficiently, and in accordance with regulations.
Through internal inspection, companies can identify potential risks and improve their control systems.
The role of internal audit continues to evolve along with organizational and regulatory changes, while integrating technology, such as applications Audithink from Sekawan Media, to improve efficiency.
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Read also — internal audit applications by industry:
- Internal Audit Application for State-Owned Enterprises: A Guide for SPI & APIP
- Bank Internal Audit Application: Guide to Features, Benefits, and How to Choose
- Manufacturing Audit Application: Guide to Features, Benefits, and How to Choose
- Mining Audit Application: A Solution for Managing Minerba SMKP Audits
- Plantation Audit Application: A Guide to Features, Benefits, and How to Choose
- Oil and Gas Audit Applications: A Guide to Features, Benefits, and How to Choose
