Internal controls are a system consisting of specific policies and procedures designed to provide management with reasonable assurance that the goals and objectives it believes important to the entity will be met.
“Internal Control System” means all the policies and procedures (internal controls) adopted by the management of an entity to assist in achieving management’s objective of ensuring, as far as practicable, the orderly and efficient conduct of its business, including adherence to management policies, the safeguarding of assets, the prevention and detection of fraud and error, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
Internal audit may be defined as, an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization. The scope of the internal audit is determined by the management. Internal auditing includes a series of processes and techniques through which an organizations own employees ascertain for the management, by means of on-the-job observation, whether established management controls are adequate, and are effectively maintained; records and reports financial, accounting and otherwise reflect actual operation and results accurately and properly; each division, department or other units are carrying out the plans, policies and procedures for which they are responsible.
The control environment sets the tone of an organization, influencing the control consciousness of its people. The control environment includes the governance and management functions and the attitudes, awareness, and actions of those charged with governance and management concerning the entity’s internal control and its importance in the entity.
Evaluating the design of a control involves considering whether the control, individually or in combination with other controls, is capable of effectively preventing, or detecting and correcting, material misstatements. Implementation of a control means that the control exists and that the entity is using it. There is little point in assessing the implementation of a control that is not effective, and so the design of a control is considered first. An improperly designed control may represent a material weakness or significant deficiency in the entity’s internal control.
Internal auditing adds value to your organization and its operations in many ways:
- Enhancement in business operations, this includes decrement in errors and improved quality of performance.
- Improved efficiency
- Decreased cost, increased profit, improved cost recovery.
- Controlled risk management.
- Development of policy and procedures, for instance, the validation of documentation, and inclusion of any necessary details and data.
- Better management communication and clarity. Appropriate hierarchy and frequency of communication within the organizational structure.
- Increased regulatory compliance.
- Improvement in preparation of reports and workflows.
What KSC Provide:-
KSC’s Internal Audit team work with audit executives, management and audit committees at companies to assist them with their internal audit activities. This may include starting and running the activity for them on a fully outsourced basis or working with an existing internal audit function to supplement their team when they lack adequate staff or skills. KSC’s Internal Audit and Financial Advisory team helps clients assess their fraud risks and implement solutions to better manage these risks and lead investigations into financial irregularities.