The increase in the volume of work makes the relationship between internal control and audit closer; Major institutions need fixed laws to assure adherence to the standards and system of the company.
This article will discuss the relationship between internal control and audit and their organizational goals to improve the company’s financial and administrative position.
The internal control and audit system :-Copy
The internal control system is the company’s procedure to maintain its financial and accounting transactions and ensure that the institution is on its way to achieving its goals.
The primary purpose of these procedures is to reduce the risks and errors the company may face, whether in the short or long term.
The difference between the internal control system and the internal audit :Copy
Despite the strong relationship between internal control and audit, there are many differences between the functions of both systems. These differences can be summarized as follow:
The internal control system :Copy
- The system determines the duties and responsibilities of the company's employees.
- It examines and audits various financial and accounting transactions; To prevent mistakes and fraud.
- The system controls the delegation of authority among managers, deciding who can negotiate valuable transactions.
The internal audit system :Copy
- The internal audit function " through internal auditors" monitors the capacity and effectiveness of the internal control system.
- The system ensures that internal control can optimally define the duties and responsibilities of the various departments within the company.
- It advises the company's management on improving the internal control system and prepares a periodic report on its activities.
Objectives of the internal control system and internal audit :-Copy
The miss ion of both systems is to preserve the entity of the company and to maintain it as a strong competitor. Perhaps it is one of the reasons for the existence of the relationship between internal control and audit.
The objectives of internal control and internal auditing of the company can be clarified as follows:
- Ensuring the integrity and accuracy of financial and accounting data and records.
- Commitment to the standards and laws of the company and submitting the erroneous to the competent legal authorities.
- Ensuring that officials and employees do their roles and duties.
- Preventing the company from incurring losses and falling prey to administrative and human errors.
- Providing advice to the company’s founders; To improve the production capacity of the company’s various departments.
The relationship between internal control and audit :-Copy
From the above, it is clear that the relationship between internal control and audit is purely integrative.
Internal control is the framework that ensures the achievement of the company’s objectives, controls its administrative, accounting, and financial transactions, and determines the tasks and responsibilities of the company’s employees.
The internal audit monitors and submits continuous reports on the extent of the ability and efficiency of the internal control system to implement the standards set for the company since its establishment; To achieve the best levels of protection, security, and preservation of the rights of the company’s managers and employees.
In addition, the relationship between internal control and audit becomes apparent when various companies and institutions collapse.
The most prominent reason was the absence of a control system that organizes its tasks and the lack of correlation between it and the internal audit system; This allowed the existence of many accounting, administrative and financial abuses and errors and ultimately led to its collapse
The advantages of the internal control services from ECPA :-Copy
Recently, the reliance ontechnologyhas increased rather than on human resources.
Many companies have digitally transformed their systems, including the internal control system.
But is it possible for this process to be done by company employees?
Of course not; this transformation needs specialized professional cadres to ensure the success of the process .
ECPA company guarantees to provide the following :
- Save time and effort
ECPAguarantees its customers to save time and effort following up and monitoring the enterprise’s workflow. It seeks to increase production and maximize profits in the fastest time.
ECPAhas the best external auditors who monitors the system infrastructure, quickly identifies the problems, and solves them in the fastest time. It also provides tools that help organize and analyze information and various digital records.
- Simplify the company’s tasks
ECPAaims at simplifying the technological process managed within the company to quickly perform various tasks, such as evaluating the team’s performance and distributing the work to the organization’s members.
Avoid losses The technological systems provided byECPAhelp reduce errors and losses; It turns the most complex financial and accounting information into a smooth and straightforward one free of complexity. It also protects the company’s essential records from being tampered with.
Determining the company’s needsECPAaims to analyze the company’s situation and the problems it suffers from and determine the required skills and needs; To ensure rapid integration within its internal system.
FAQs about the relationship between internal control and audit :Copy
What are the five elements of internal control ?Copy
- Controlling the work environment.
- Assessing and identifying risks.
- Organizing communication and information supply processes.
- Monitoring activities that serve management policies.
- Monitoring internal control assessments.
What are the internal controls in an audit ?Copy
- Ensure objectivity and transparency.
- Disclose all problems.
- Inform management of potential dangers.
- Avoid conflicts of duties and responsibilities.
What are the three objectives of internal control ?Copy
- Protecting the organization's resources from mismanagement and misuse.
- providing the most accurate information to ensure the integrity of accounting reports.
- Achieving strict adherence to laws.
What are the two types of internal controls ?Copy
- Preventive controls aim to detect potential risk and reduce their effects.
- Deterrent controls aim to prevent the institution's personnel from committing violations.
Who is responsible for internal control ?Copy
The Board of Directors is primarily responsible for internal control and the integrity of its systems.
In summary, the relationship between internal control and audit reveals that it will be challenging to manage the company’s resources and administrative and financial burdens without the internal control system.
In the absence of the role of internal audit, it will not be ensured that the control system performs its essential function optimally. Both systems serve the institution’s objectives and provide practical suggestions to improve and advance the company’s position.
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