Internal audit’s presentation in a private company or non profit organization


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Internal audit’s presentation in a private company or non profit organization

  1. 1. Internal Audit’s presentation in a Private Company or Non-Profit organization Summary: An internal audit function is typically seen by financial executives as a best practice, and in the case of a publicly-traded company, an internal audit group can be a necessity. Recently internal audit’s role has been varied, but most internal audit groups have spent a significant amount of their time dealing with the requirements of SOX. Where then does internal audit fit into a private company or a not-for-profit organization? Internal Audit’s Role in a Private Company or Non-Profit- "The auditing department is identifying situations where there is waste in terms of financial resources. also identified ways in which improve operating efficiency and reduce the workload." In a Private Company or Non-Profit organization internal auditors role is very important, an internal auditor can found the actual problem on those company so that management can take a vital function that would be helpful for company position, that can possible for internal auditor, also In public traded companies having to do financial audits, nonprofit organizations must perform a separate compliance audit. In order to understand the difference between the two, let’s create an example with a legitimate transaction. Suppose for all checks submitted, there must be two signatures required. This particular check has only one signature of approval. For a regular audit, the auditor can use common sense and approve the check based on the belief of its legitimacy. In a compliance audit, there are no exceptions. The check requires the dual signatures and cannot be approved Internal audit had a reputation for focusing primarily on an organization’s financial statements and the internal controls directly affecting the financial statements. That is no longer the case. Modern internal audit groups are beginning to become more of a “risk-based” function. Governing bodies and management have been asking the question “What are our organization’s primary risks, and are we covered?” Obviously some of these risks are related to reporting accurate financial statements, but what about strategic, operational and financial risks? In other words, internal audit groups are beginning to focus more on what could truly “bring an organization down.” Consider your organization’s strategic and operational goals. One of the key roles of management is to ensure that an organization’s strategic and operational goals are clearly communicated to the organization and the appropriate tactics are taken to ensure these goals are met. In addition, management should be keenly aware of the risks the organization faces that may impede the accomplishment of these goals. Internal audit’s role in this situation is to help management and the Board clearly articulates these risks and further ranks these risks in order of impact to the organization and their likelihood of occurrence. One of the common problems faced by most organizations is the existence of “silos” or independently operating groups or divisions. Internal audit helps to break down some of these barriers within an organization around risk identification. In addition, given internal audit’s independent position within the company (typically, internal audit reports to the Board or audit 1
  2. 2. committee), the Board can be assured that it is receiving an unbiased identification and ranking of its organization’s key risks. In addition to simply identifying and ranking these risks, internal audit can help assure management and the Board that the key risks are appropriately controlled. For instance, a key risk of many private companies lies within its ability to obtain operating capital, especially in an economy in which capital is difficult to obtain. Internal audit could help ensure that the company has good controls around its treasury process so capital is available when needed. Internal audit also plays a significant role in organizations that are highly regulated. Internal audit can help ensure to management and the Board that the organization is taking the appropriate steps to ensure compliance. In the case of a non-profit, internal audit can help to ensure that the organization has not deviated away from its charter, thereby helping to ensure its tax-exempt status is not at risk. Almost every organization, whether it is a privately held business, a publicly owned corporation, or a nonprofit organization, must prepare financial reports. These reports are like the lifeline of a company and help owners and managers make decisions and help provide the company’s financial status to shareholders, employees, regulators, and the public. A key to a successful internal audit function is the ability of the group to clearly understand the strategic goals and operations of the company or organization by possessing knowledge of the industry & most modern internal audit groups are multi- disciplinary in nature and include representatives from not only finance, but also information technology and operational experts. Conclusion: Internal controls aim to prove that the company’s financial statements are accurate and reliable. Internal controls can be categorized into two areas – administrative and accounting. Administrative controls deal with the procedures and records that lead to management’s authorization of transactions. Accounting control is a set of procedures and records that involve safeguarding assets and the reliability of financial records. About The Author: Mohammad Wahid Abdullah Khan (MBA, CPFA, CPIA, CFC) Dhaka, Bangladesh Home Page: MOHAMMAD WAHID ABDULLAH KHAN Dhaka, Bangladesh, is a PhD Candidate in "Criminal Psychology" as well he is “freelance Author, online columnists, Human psychoanalyst, industrial psychotherapist, Certified Financial Consultant, & Certified Forensic Accountant, too dynamic entrepreneur, utilize creativity leadership and teamwork to design and execute solutions that creates customer value. 2
  3. 3. Moreover Mr. Khan is CEO & Certified Consultant of” Wahid & co, Wak Business Solutions, Wak Business Support, “Wam Associates” & leader of the” Wahid Consulting Group”; Prior to consultancy Mr. Wahid has fulfilled more than 14 (fourteen) years working in various fields of Business like - Accounts, Finance, Auditing (Internal & External Audit), Project budgeting and Project costing related positions in some of the largest group & join venture companies in Bangladesh. Which experience encouraged him to work as a “professional consultant” from a few years, Mr. Khan is realistic and implements his assignment within the bounds, objectives and capabilities of the organization. His extraordinary quick understanding of strategic options helps find direction and supports management in decision making. He has a “doer” attitude and gets things done on the technical and functional side. As a “Consultant” Mr. Wahid believe that his study & physiological motivation is very strong, as well my confident level is high & my quantitative skills are well-built also he is crystal clear about my every single goal which helped me to be a very tough contestant “Consultant” in the business consultant arena Professional Membership: • Associate Member – Institute of Management Consultants Bangladesh (IMCB) •Member- Association of Proposal Management Professionals® (APMP®) • Member – The Next level Purchasing Association. •Member- The Chartered Institute of Personnel and Development (CIPD) • Member - The Professional Risk manager’s international Association (PRMIA) • Affiliate Member- Global Association of Risk Professional (GARP) • Member - The International Association of Risk and Compliance Professionals (IARCP) • Lifetime Member - Dragon fire martial arts association “International” (DFMAA) • Individual Member: License Logic LLC • Associate Membership - The American Psychological Association (APA) • Member - The Global Community of Information Professionals 3