Organizations are restructuring, reinventing themselves to change their goals and their processes in order to respond appropriately to a changing environment. In this context of change and increasing competitiveness in all market segments, organizations seek productivity gains and improve their methods and management tools.
In this scenario, the audit function is increasingly intervening in the diagnosis of certain situations, including the company’s viability, efficiency and effectiveness of controls and processes, and preventing fraud and illegal acts. In this sense, the role of internal auditing has emerged as a highly developed function as a reflection of the needs and expectations of the organization as a whole to survive and thrive in the market.
The Institute of Internal Auditors defines internal audit as an activity that is independent, of objective assessment and consulting activity designed to add value and improve operations of an organization in achieving its objectives through a systematic, disciplined approach in evaluating processes effectiveness of risk management, control and governance.
This focus on organization is nothing but a translation of the developments and changes in the role played by internal audit during the last decade. This change was based on a paradigm shift that left out the traditional function of financial control / accounting audit, focusing the internal audit function on identifying all the risks involved in various activities for the organization, thereby ensuring that the objectives are met as efficiently and effectively as possible.
In this sense, it is expected that the internal audit is primarily a tool to support to top management and to help the organization achieve its objectives. The main objective of the internal audit activity operates as a management strategic partner, allowing it to serve as an advisor and consultant in the identification of risks and proposing possible strategies for action to enable the institution best performance within the sector.
Internal auditing is a natural and necessary part of any organization, providing analysis and assessments, perspectives, recommendations, results, tips and information on any activity being audited, including the promotion of more effective control at reasonable cost. Should oversee the effectiveness and efficiency of the implemented system, revealing weaknesses, determine the causes, assess the impact and recommend solutions that bring those responsible to act. This is a way to measure resources (human, material, financial and informational) helping the leadership to validate, consolidate or change their strategy.
Thus, internal audit must act within the organization, evaluating the effectiveness of their results in relation to the resources made available, as well as economy and efficiency of internal controls in place for the management of resources. Internal audit, to suit new trends have to be agile and flexible to adopt new features that add value to the organization. This flexibility facilitates, among others, communication with stakeholders.
Adding value is a sum of internal and external interests that enable a gain, not necessarily related to money, which is well used to corroborate the management of the organization as a whole. Another key turning point for internal audit, is the demystification of the function, from being seen as a nuisance that is present only to point out mistakes to be seen as partners in finding a common result, this is the new culture of internal audit.
The internal audit profession has been required a number of different expertises to the performance of their business: accounting, field management techniques, total quality, marketing, organization and methods, strategic planning, information technology, human relations, among others. The internal audit becomes an active component of the company’s internal management, making that their comments are useful and essential in finding an appropriate management features. Its opinion and critical view of the processes will be based on evidence that will provide managers with the proper valuation techniques used in business management, where the acceptance of changes of direction by the management depends on how precise that opinion is.
The success of internal audit is a process of alchemy, bringing together professional auditors that are intelligent, highly motivated and committed to the success of the company, with the responsibility to contribute to the maintenance of a sound internal control and set the main strategic objectives of the company. In this context, the internal audit function is a center of excellence to train highly qualified staff to ensure a system of effective internal control within the company and ethical behavior beyond reproach.
Top management should enable these professionals with complete autonomy, trusting them with information about the current strategy of the organization so they can their role. A strong and independent internal audit department is key in helping the organization achieving its objectives.