Internal Auditor Job Description & Profile
Internal auditors are responsible for ensuring that financial and non-financial assets of the firm are protected. A sustainable business needs to safeguard itself against reputational damage, operational losses, financial losses, regulatory action and so on. Internal auditors are the ones responsible for creating the underlying structure that controls and monitors these risks on an ongoing basis.
The internal audit team reports to the Audit Committee which is comprised of board members with relevant accounting and audit experience. They report to the board about the effectiveness of controls and the quality of reporting and lapses or issues of concerns that they cover during their periodic audits.
Let’s look at some of these functions in greater detail.
Ensuring that financial reporting is reliable
Businesses are required to maintain a record of their operations and file periodic reports like the balance sheet, profit and loss statement, shareholding, etc. While this work is done by the accounting department, internal audit is responsible for ensuring that the information is reliable, compliant with applicable local laws and international standards, as well as any internal guidelines set by the board.
Risk assessment and audit
This is a big part of the job which includes multiple phases and a thorough understanding of business operations as well as the risks involved. The first part is the planning phase which requires a complete assessment of what aspects need to be looked at, what data will be required, planning for resources, budgets, etc.
The next phase is the fieldwork or data analysis where auditors comb through all available information in order to perform a thorough risk assessment and identify any errors or control issues. The final phase is presentation and reporting where the information is presented to the board or other relevant decision-makers so that necessary corrective action may be taken.
The end result of this process is a more robust control, reporting and governance structure which ensures financial stability for the firm and reduces the risk of operational lapses.
Data gathering and analysis
Almost all of the relevant data that auditors have to go through today is in digital form. However, it is still important to get the correct data from the right sources and in a timely manner.
Given the vast quantity of data that auditors have to go through, advanced data analytics techniques have become increasingly important. Internal auditors either have dedicated data analysts in their teams or they themselves perform this role in order to better handle the mountains of data that they need to sift through.
Communication and relationship management
All the analysis in the world is moot if it is not acted upon. Internal auditors have to communicate their findings effectively to management, the board or other decision-makers. Auditors can come across fraud, negligence or situations where laws or regulations have not been followed. Such matters tend to be quite sensitive and that is why effective communication is key.
Internal auditors also rely on other teams to get information and data. Different business units may operate in their own unique way and it is important for auditors to clearly understand the business that they are auditing in order for them to be effective at their jobs.
Designing and maintaining a control structure
Internal auditors analyse the strength, robustness, and thoroughness of all sorts of control mechanisms. This includes things like process guidelines, reporting chains, system architecture, technology processes and so on. They must validate the quality of these mechanisms and document the effectiveness of these controls in preventing operational or other lapses.
It also falls to the auditors to suggest improvements if any loopholes are detected. Depending on the scope of such assignments, these change management tasks can take up quite a bit of time and energy but are necessary to ensure quality control and governance.
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