In the early stages of a company’s life cycle, as a rule, the owners are directly involved in the management process, the processes are not formalized, their control is situational, and full-fledged management and control systems have not developed.

In these conditions, the subject area of ​​internal audit turns out to be very narrow:

• The guaranteeing function of the audit is not required by the owner – he receives information directly in the management process;
• It is impossible to assess the effectiveness of internal control and risk management systems – they have not yet been created.

It is hardly advisable to create a corresponding service. But as the company develops and diversifies, its scale grows, the dimension and complexity of management tasks increases and the range of risks expands, regular processes are formalized, controls and risk management is established.

Assessment of risks and operational efficiency, monitoring of control systems, etc. then become relevant. In these circumstances, internal audit outsourcing in India becomes a very useful management tool.

Internal auditing is an activity that seeks to improve and add value to an organization’s operations. Internal audit has two main functions, namely assurance and consulting

Recent developments are increasing the importance of internal audit service providers in Delhi. Internal audit plays an important role in the effective operation of the internal control, risk management, and corporate management systems of the institutions, the management of risks, the prevention of losses, and the realization of targets.

The purpose of internal auditing is to assist all members of management in the effective discharge of their responsibilities by providing objective analyses, assessments, recommendations, and comments on the activities reviewed.

With the properly organized work of the internal audit service, a company receives a lot of benefits:

• The company has a permanent division focused on evaluating and improving its performance, i.e., doing this not from time to time, but continuously, systematically and consistently;
• Permanent work in the company allows auditors to delve deeper into its features, the specifics of activities and management, conduct more accurate and detailed assessments, give more valuable recommendations, track the progress of their implementation;
• The audit covers subject areas that are extremely important from the point of view of achieving the company’s goals: control systems, risk management, operational efficiency; compliance with the law, as well as the procedures and decisions of the company’s bodies;
• Data of internal audit has a higher degree of reliability and can be used by executive management in managing the organization;
• When a council is created in a company, the internal audit serves as a source of objective and independent from the executive management information on the effectiveness of corporate governance, internal control, and risk management systems, the responsibility for the monitoring of which is assigned to the council;
• The board can delegate some of its monitoring and oversight functions to an internal audit service functionally accountable to the board;
• The presence of an internal audit service, its proper functioning can be a good signal for an investor, lender, or potential client.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

Posted by

CA Aman Aggarwal

AKGVG & Associates