Internal audits are fundamental to staying within performance benchmarks set for functions fulfilled by the companies as well as establishing full compliance with any concerning regulations. Choosing a suitable frequency for such types of audits depends on certain indicators like the size of the corporation, legislation applied in the relevant industry alongside organizational necessities preferred.
Main Indicators
The frequency of internal audits is determined by taking the below points into consideration:
- Regulatory Necessities: Healthcare, food production, finance and similar sectors may exclusively require certain internal audit processes with a dictated frequency.
- Company Size and Complexity: Organizations with larger processes managing multiple departments require usually more frequent audits considering diverse risks.
- Risk Levels: High-risk industries as well as startups succeeding rapid expansions might benefit from quarterly or even monthly audits.
- Changes in Operations: Mergers, acquisitions or applying new technologies that can bring major differences necessitate an immediate internal audit for reassessment purposes.
- Industry Best Practices: Certain industries present standard audit schedules based on peer benchmarking in order to protect competitiveness and establish full compliance.
- External Stakeholder Expectations: Companies with third party investors, strategic partners or mere public accountability demand increased audit frequency for full transparency focus.
Recommended Audit Schedules
While internal audits have an optional nature and may differ, there are general practices commonly applied in all industries:
- Annual Audits: The most common internal audit frequency preferred by companies to establish alignment with laws as well as for inspection of overall performance levels in company functions.
- Quarterly Audits: In case of strict compliance limitations, it might be ideal for higher operational risks and industries.
- As-Needed Audits: Internal audits might be conducted as they are required considering major operational changes, suspected fraud or other critical incidents that require immediate actions.
Effective Internal Audit Plan
Taxpayers can determine the most suitable schedule for internal audits by paying attention to three main points:
- Necessity: Legal aspects, the context and risk items should be evaluated for such frameworks.
- Objective Determination: The achievement focus should be decided in advance: compliance, locating frauds or improvements.
- Stay Flexible: Taxpayers should always be ready to adjust the frequency as it might vary on major changes as well as new risks in the future.
