How does internal audit add value?

Allie Westwood 04 May 2023

Contrary to widespread belief, internal audit is not about ticking boxes to get a job done. It’s about delivering real value to organisations. With this in mind, we ask the question: how does internal audit add value?

Internal auditors add value by helping organisations to succeed. They provide useful insights, identify competitive advantage, protect your assets, act as a third line, and guarantee good performance.

Over the past few years, organisations have increasingly recognised this. But with new challenges arising all the time, key stakeholders will always want to know the benefits that internal audit departments can generate for them.

So, how does internal audit add value to an organisation?

Let’s explore this in further depth.

5 advantages of internal audit

1. They give the objective insight that others might miss

As the third line, internal auditors provide assurance to businesses that risks are under control. They also make sure that a company’s approach to risk and controls are dependent on sound processes rather than people, which provides objectivity and consistency.

This is why organisations can see the internal audit function as a trusted advisor. With complete oversight of their organisation, internal auditors are in a great position to join the dots and see the bigger picture, as well as notice warning signs and gaps that others may have missed. By reporting their findings, they help management to make the best decisions.

2. They can identify competitive advantage

Another benefit of internal audit departments? They are the driving force behind putting a company in a better position.

Take new regulations as an example. If new consumer protection guidelines are being introduced, the internal audit function can help their organisation to prepare in a way that protects both the consumer and the standard of their products and services. This ensures there is no break in service and, ultimately, can improve the customer experience and help with retention.

By identifying instances like these, and communicating them to the senior leadership team, internal auditors are an indispensable resource. 

3. They protect your organisation’s assets

All organisations have important assets. These may include your:

• Finances
• People
• Products
• Property
• Customers
• Reputation

If risks do materialise – or if certain things aren’t working as well as they should – the consequences can spiral. This can then have a detrimental impact on your assets. Internal audit is there to prevent this from happening.

Internal audit is also there to ensure that organisations use their resources efficiently and effectively. This is especially true for the government sector, where internal audit has a duty to prove that government bodies are providing the best value for money whilst also delivering essential services.

4. They ensure risks stay under control

Internal audit is the third line that checks risk controls are adequate. How do they do this? First, they check that organisations identify and handle risks correctly. Then, they test those checks. Internal auditors also devise the appropriate systems, processes and actions for checking and reporting on risk, in line with the risk management strategy.

What’s more, internal auditors will be aware of the compliance landscape and any related challenges. By advising on this, your business can prepare for risk in a proactive, rather than reactive, manner – putting you a step ahead. This makes internal audit critical to business planning.

5. They guarantee overall good performance

Whilst a company’s board of directors is responsible for corporate governance, internal auditors can support. They do this by providing objective assurance and insight into how well an organisation’s risk management, internal controls and governance processes are running. They can also review areas like company culture, sustainability, cybersecurity, and other major business risks.

In doing so, the internal audit function helps to ensure that corporate governance is as effective as possible. This helps organisations to perform well and meet their goals.

An internal auditor’s ability to deliver this value depends on how well-equipped they are to do their jobs effectively. With modern technology, internal audit departments can gain real-time assurance and a 360-degree view of audit activities, helping them to make their audits more efficient, transparent and risk-aligned.

What are the big ethical talking points that internal auditors need to be aware of in 2023?

Watch our webinar on-demand hosted by Stephanie Jones, Head of Internal Audit & Risk, and Tina Whitington, Chartered Accountant, break down some of the biggest ethical dilemmas facing our industry right now, and earn 1 CPE credit upon completion of the session.

Watch on demand