Internal audit plays a very important role in the development of a company. It helps in keeping track of systems and procedures by predicting risks and providing solutions as to what to do to strengthen the weak areas and so on. Therefore, most of the companies in Singapore usually go for either outsourcing their internal audits, co-source or establish an in-house auditing department. However for reasons of confidentiality many companies choose for in-house auditing. It is completely up to a company whether to keep its confidentiality or choose to outsource. Sometimes they co-source their internal audits by giving only certain areas for outsourcing.
1. Discuss expectations: It is always better to obtain and discuss expectations with the senior management of the company, the board and audit committee such as listing standards for listed companies etc.
2. Develop audit charter: Always involve the audit committee of you company in all the activities related to finances. You can even develop an audit charter and get it approved by the committee.
3. Design a budget: It very important to draw a budget and decide on the staffing model whether it is an in-house department, co-sourced or out-sourced. And also decide if the department will be staffed internally, outsourced or co-sourced.
5. Recognize: Identify auditable areas in your organization. This will help you determine the areas you will have to concentrate more and where to invest to gain profits.
6. Assess risk and develop a plan: Conduct an initial risk assessment in your company. You can do this along with the management of your company and you audit committee. This will ensure you about the places not to invest and which areas are weak. Once you assess the risk develop an internal audit plan, to deal with the risk.
7. Compliance with the law: Make sure your company meet all the statutory requirements according to the Singapore companies act.
8. Plan, execute, update and enhance: Plan and execute the audit work and follow up on audit recommendations and keep updating on the changing risk assessments throughout the year to enhance the internal audit function to meet the changing need of the management and the audit committee.
Follow these tips for an effective and efficient establishment and function of an internal audit department. However, outsourcing is an effective way to deal with audits as it helps you to focus more on your mission and vision and keep up with the highly competitive business environment and progress in your business quickly.
