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How Internal Audits Help Organizations Grow and Adapt to Change

By Jason Emmons
Partner, Internal Audit Services, Moss Adams

By Weston Nelson
Partner, Internal Audit Services, Moss Adams

See all this Month's Articles

Original Publish Date: June 6, 2022

Requests and demands for internal audits can be vast. It’s important to drive progress and growth from within your organization by harnessing opportunities that can help:

An internal audit can keep you moving forward if you’re looking to attain or maintain compliance with the Sarbanes-Oxley Act of 2002 (SOX), regulatory requirements, or government contracts, or if you simply hope to gain an overall assessment of your internal controls related to finance, operations, or compliance.

What Is an Internal Audit?

An internal audit involves an independent and objective evaluation of financial and operational business activities, including verifying compliance with various federal and state laws by implementing processes and procedures to reduce risk exposure while protecting the company’s assets and efficiency.

For large companies, it’s ideal for an internal audit to take place on an annual basis because these companies already shift their internal control and audit focus areas and review their risk areas annually.

As audits are scalable based on objectives, internal audits are also beneficial for smaller companies that don’t want to develop a full internal audit department.

Why Should Companies Conduct an Internal Audit?

Auditing a company’s internal controls and operational practices can provide objective insight to help a company identify gaps, detect fraud, mitigate risk, and remain compliant.

There are three main reasons to perform an internal audit:

Financial and SOX Compliance

While fast-growing companies might be lured by shortcuts, cutting corners can often have devastating effects in a heavily regulated market.

Not fully addressing compliance requirements under SOX is one shortcut that can lead to errors in financial statements and corporate disclosures, such as devaluing stock price and damaging investor confidence.

A balanced approach to SOX compliance considers the organization’s risk tolerance, budget, and operational goals.

Top Value-Adding Benefits

Factors to Consider

Compliance Testing

Compliance testing is auditing for adherence to a policy, rule, or regulation. Compliance testing is the process used to test internal controls related to risk.

Compliance testing is often the first type of test an organization performs when assessing the control environment.

Top Value-Adding Benefits

Factors to Consider

Operational Audits and Requests

Primarily composed of a combination of processes, people, and IT systems, these audits review internal control activities.

Deficiencies in any of these areas can lead to a disclosed material weakness—before or after you go public—even if that area isn’t subject to formal assessment by external auditors.

External auditor assessments could range from privacy assessments to very technical reviews, but this can vary depending on the organization’s industry.

Top Value-Adding Benefits

Factors to Consider

How Can Internal Audits Help Organizations Adapt to Change?

Auditing a company’s internal controls can provide objective insight to help a company identify gaps, detect fraud, and mitigate risk.

When leveraged with purpose, an internal audit could add value by:

Ultimately, internal audits help to improve the business and its people, while minimizing risk, maintaining compliance, and increasing confidence of those charged with governance.

We’re Here to Help

For more information about your internal audits and how best to utilize them, please contact your Moss Adams professional.

You can also visit our Internal Audit Services for additional resources.