Overview

Internal audits basically evaluate company’s internal controls, including its corporate governance and accounting processes. It ensures compliance with laws and regulations and helps to maintain accurate and timely financial reporting and data collection. Internal audits enable management to ascertain operational efficiency by identifying problems and correcting lapses before they are discovered in an external or statutory audit.

Internal audits play a significant role in a listed company operations and corporate governance. Sarbanes-Oxley Act of 2002 (SOX) holds management legally responsible for the accuracy of financial statements. SOX also requires that a company's internal controls should be documented and reviewed as part of their external audit. Internal controls are processes and procedures implemented by a company to ensure the integrity of its financial and accounting information, promote accountability, and help prevent fraud. Internal audit ensures appropriate internal controls are present such as segregation of duties, authorization, documentation requirements, and written processes and procedures. Internal audits seek to identify any problems in a company's internal controls.