Advantages of company's internal audit ☝️

One of the primary goals of any business is to be profitable. Sure there can be exceptions, but in most cases, the ambition to increase revenues keeps an organization motivated. Anything that comes next, be it technological innovations, or employee support systems, or CSR activities, has direct or indirect intention towards the same. A company’s revenue comes mainly through sales and is naturally prioritized over other business aspects. A common negative effect of this is while chasing sales, companies tend to overlook operational activities and let them take shape on their own.

Consider a situation where an employee can fix their own responsibilities and duties. They can finalize deadlines as per convenience and can also do their performance analysis. Obviously, there will be no credibility of such an operational framework. It will reduce efficiency at every level, eventually impacting sales. To prevent such scenarios, internal audits are needed.

What is an internal audit?

Internal audits are independent business processes with a clear structure and strategy, focused on regular assessment of the quality of the company’s operating activities.

Internal Audits provide unbiased, independent reviews of all or selected business procedures. The goal is to provide an objective source of information regarding the organization’s risks versus rewards, operating environment, the effectiveness of standards, and compliance with local and global laws, regulations.

Regular internal audits help ascertain that the organization is cable not just to survive against competition but to win against them as well. The auditors collect data in all forms that reflect on how the business is functioning and use it to demonstrate where it is performing well and where there is room for improvement.

Limitations of Internal Audit

With a better understanding of internal audits, it’s purpose and goals, the benefits it provides can be conveniently extrapolated. However, there are limitations to conventional internal audits, such as:

• Shortage of expertise: Dedicated staff is required to draft the auditing process covering what operational activities will be reviewed, which employees will it cover if the company is spread in different geographies then which locations will be part of the audit and such. The absence of such specialized professionals would limit the benefits the company would expect from internal audits.

• Time delay: There is a significant time lag between audit planning, its execution, data collection and analysis. By the time insights are drawn from the analysis, the actual situation might have changed. Any improvements implemented could be too little too late.

• Human error: There may be undetected errors as audit results depend upon the proficiency of the internal audit staff. If they are experienced and competent, the chances of undetected error would be very less. The opposite is true in the case of new or incompetent auditing staff.

• Lack of responsibility:  Top management may overlook recommendations of audit results. This usually happens when decision-makers are not able to visualize and correlate between “what happened“ and “why it happened“. To them, audit results could seem like just another report.

• High cost: Expenses on audit staff and making adjustments to parallel operational activities to incorporate scheduled audits incurs costs. The bigger an organization, the higher is the cost.

Advantages of QVALON internal audit solutions

Along with the obvious benefits, QVALON based internal audit overcomes the above-mentioned limitations of a conventional (and outdated) internal audit process. Let’s find out how.

The obvious benefits:

• Internal audit introduces a proper system that has steps and procedures to maintain workflow in operational activities. This makes it easier to achieve goals and desired results.

• Previous audit results are used to see how the organization is doing and progressing and then to make effective decisions after this comparison. The managers also use the internal audit to make necessary changes for better functioning.

• The internal audit makes sure that the cash, inventory, and other assets are being put to proper use and aren’t involved in anything other than for work.

• Internal audits prevent misuse or wastage of resources, which ultimately leads to increased costs for the organization.

• Internal audit can help with fixing the division of duties and responsibilities. Audit results can point out the need for separate labor required for a particular task. This also helps assign responsibilities to underperformers.

• Lastly, internal audits help investigate various aspects of the business properly. Wherever there are doubts, audit results can be used to verify if doubts are actually true.

QVALON specific benefits.

• Self-check function or system access by external auditors (mystery shoppers) eliminates the need for physical verification at each facility. This is vital for organizations that are based at multiple locations.

• List of audit questions that cannot be changed, prevent anything to be forgotten or missed. The need to confirm an answer with photo(s) or audio recording(s) increases the validity of the audit result.

• The system discourages auditors to start/finish the audit if they are not at the store through geo-position control.

• It promotes employee training since to work with audits; it is necessary to have updated knowledge of the company's standards and business processes. Also, regular participation in internal audits helps in the memorization of standards.

• QVALON is a digital system, which means that the audit result is available for analysis immediately after the audit is complete.

If your business is still using outdated ways for internal audits, then chances are audit results are incomplete and by the time you draw insights from them, the actual situation has changed. Your continue would continue to face similar problems repeatedly. Or in the worst cases, there will be additional new problems.

At QVALON, our team delivers a personalized, simple, and cost-effective approach to grow your business. Connect with us and understand how a new approach towards internal audits can transform your business for the better.