The importance of Internal Audit in organizations

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Every August 11 in Argentina the Day of the Internal Auditor is celebrated, in commemoration of the creation of the Argentine chapter of the Institute of Internal Auditors in 1960.

Every company has goals it wants to fulfil. Achieving the mission is not always an easy task, but it is what drives organizations to go beyond by providing products and services of excellence. Markets change and so do the rules of the game. This is why it is essential to have an internal auditor who provides a disciplined and systematic approach to evaluating and improving the effectiveness of risk management, internal control and governance processes.


What is interal audit?

The Institute of Internal Auditors (IIA) defines internal auditing as "an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations".

The scope of the activity is comprehensive, encompassing both financial and non-financial aspects and is focused on future events as a result of its continuous review and evaluation of processes and controls. In addition, it has an important role in the prevention and detection of fraud in any form.

To perform their job effectively, all internal auditors must be independent and objective. The auditor must have no conflicts of interest with the company or the people who work for it, in order to express an impartial opinion. One way of expressing it is through double reporting: to the administration and to the board of directors. The chief audit executive (CAE) reports to management for administrative assistance, and to the audit committee for strategic direction and accountability.

To maintain objectivity, internal auditors should have no personal or professional relationship with the area being audited to keep a non-judgmental and impartial mindset. Nor may they receive gifts, bonuses or special benefits that impair (or are presumed to impair) their professional judgement. At the same time, they promise confidentiality about the process and the results by not discussing with third parties (also safeguarding impartiality) or using the information revealed during their work for their own interests.


What is the importance of the internal auditor?

By doing his job he aligns himself with the organization's strategies, objectives and risks not only to ensure compliance with regulations, evaluate operations and ensure transparency; but he can also be an agent of change in the company by recommending operational improvements, evaluating, establishing and implementing policies and procedures that promote effectiveness and efficiency and optimize resources.

The internal auditor's analytical thinking and investigative ability are qualities that enable them to get the job done accurately and take the organization to the next level in terms of compliance and, eventually, growth by fostering financial, operational, and human capital strength.


What makes a saccessful internal auditor today?

First, an internal auditor needs a team of experts as specialized as the company and the people they are auditing. The increasing number of new regulations and complexity of accounting standards, competition, and the dangerous sophistication of audit fraud make the work of these teams exponentially difficult.

Skills must go beyond the mechanical application of new accounting rules, with new assessments, controls, and judgments creating a need for new skills.

Today, the most effective auditor possesses a wide range of non-technical attributes, as well as deep technical expertise. Hard skills are still absolutely necessary, but they are no longer enough on their own.

Many senior audit executives place increasing value on qualities such as risk and business acumen, analytical skills, communication, service orientation, the ability to recognize and respond to diverse ways of thinking, learning styles, and cultural qualities.

Non-technical attributes have been recognized as competitive differentiators: soft skills are the new hard skills.


At Grant Thornton, we would like to especially salute our internal audit teams, who, with their expertise, knowledge and human skills, carry out internal audits of quality in today's dynamic and complex context.

If you want to know how our audit team can work with you to achieve your company's objectives and go beyond, click here.