Everything you need to internal audit

 Having an adequate inspection and control system is the key to meeting the organization's objectives.

 Introduction

 Having a control system within risk management allows us to monitor and monitor the correct operation of the processes. There are a large number of audits , but the internal one focuses on meeting the organization's objectives. This is an activity that is done independently in order to generate value and improve business operations.

 Sometimes it is carried out by agents external to the company, better known as auditors who are in charge of carrying out an evaluation of the organization, to verify if the management system is adequate, efficient and effective.

 In the following eBook you will find all the information related to internal Auditors in Dubai, the types that exist, its mission, the principles on which it is based, the stages and phases that are carried out, and who is responsible.

 What is internal audit?

 It is an evaluation or an examination carried out by organizations to verify whether the operation of the different areas is correct , in order to guarantee the proper functioning of the established controls. 

 According to the Institute of Internal Auditors of the United Arab Emirates. "It is an independent activity that takes place within the company and is aimed at the review of accounting and other operations, in order to provide a service to management."

 This is given by the need for organizations to maintain control in order to make their operation more efficient. In this case, a review of the internal control system is carried out , as well as the policies and procedures defined to protect business assets , in order to avoid fraud, sabotage, and increase operational efficiency and effectiveness.

 When companies begin to have notable growth, it is when the appearance of internal auditing is most necessary, since it becomes almost impossible to have direct control of all operations.

 “Internal audit is an independent and objective assurance and consultation activity, designed to add value and improve the operations of an organization. It helps companies meet their goals by providing a systematic and disciplined approach to assess and improve the effectiveness of risk management, control and governance processes,

 Goals

 The main objective of the internal audit is to comply with the functions, activities, responsibilities and processes established within the company's policies.

 On the other hand, verify that the accounting information is reliable and monitor that the control system is working properly. This must start from a previously established plan, which highlights the policies and procedures to be implemented.

 Fundamental principles

 These are in charge of generating the effectiveness of the internal audit . In order to have an adequate inspection system, it is important that all the principles are integrated and operate at the same time within the organization.

 1.       Demonstrates integrity: The integrity of internal auditors establishes trust and, consequently, provides the basis for trusting their judgment.

2.       Demonstrates competence and due professional care: The Internal Auditor is always trained to perform his job and profession in the best way possible.

3.       It is objective and free from influences (Independent): There should be no coercion or limitation for the development of the internal audit, all in order not to lose objectivity and the proper focus that the audit should have.

4.       Aligns with the strategies, objectives and risks of the organization: Every internal auditor adapts to the needs and policies of the organization.

5.       It is appropriately positioned and has adequate resources: It has all the necessary resources, giving the auditor access to everything essential to carry out the audit.

6.       Demonstrates quality and continuous improvement: The auditor never limits himself, always gives feedback on his learning and constantly seeks change and internal improvement.

7.       Communicates effectively: The internal auditor has the ability and ability to work as a team and use the right means of communication to effectively develop his audit.

8.       Provides risk-based assurance: The auditor focuses his work on a risk-based audit, since he understands the importance of auditing risk-focused processes (risk plan of the organization); thus achieving an effective audit.

9.       Makes deep analysis, is proactive and future-oriented: It is always at the forefront, since it is known that an auditor does not wait to adapt to change, but rather anticipates change and generates change, demonstrating and developing their ability to always orient themselves to the future through your analysis and observations.

10.   Promotes organizational improvement: The internal auditor is a generator of change, contributing through his audit a true continuous improvement for the organization.

 Audit plan

 Knowing how to carry out a risk-based audit process will help you identify and take action regarding technical and organizational risks that may arise from the external, internal, technical or human part. Below we share the step by step you can follow to carry out the annual audit plan stage.

 It is no secret that audits with experts in protection systems and comprehensive risk management are essential to obtain an objective overview of the state of the organization.

 1. Determination of the audit universe

 Depending on the stages and phases of the internal audit , it is necessary to carry out a general analysis of the organization to be audited. That way, the audit team can have a better understanding of how the processes work and what the entity's objectives are.

 Specifically, the audit universe refers to the set of areas of the organization that are susceptible to auditing (human talent management, financial management, technology management, commercial management, communications management) in order to provide adequate assurance to each one of those business functions.

 2. Establishment of the internal audit plan

 In line with the stages and phases of the internal audit , the plan should be based on the data collected in the first step, and contain information such as: objectives, scope and criteria of the audit, units and areas that will be audited within the company, officials in charge of the quality of the processes, priority aspects, time and duration of the inspections, among others.

 The work plan should also be based on documented information and feedback from senior management and the board should be taken into account. The auditor who coordinates the implementation of the annual plan is in turn responsible for communicating the resources required for the internal audit and the possible impact in the event that these resources are limited.

 To carry out the annual plan, it is necessary to evaluate the level of risk inherent in the processes, identify the requirements of the audit committee and management, know what the legal requirements are for internal audit and document possible findings and opportunities for improvement that arose in plans. From earlier times.

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 3. Annual audit plan vs. resources

 Depending on the projects that arise in the plan, it is necessary to allocate the human, financial and time resources that will be required to carry out the plan. According to the availability of these resources, it will be possible to choose the projects that can be attended, according to the level of priority.

 4. Communication and approval of the plan

 Finally, the annual audit plan must be presented to senior management in order to obtain final approval from the board of directors or the audit committee. In this presentation, it is necessary to demonstrate that actions were taken in case of resource limitation.

 In turn, we advise you to inform senior management and the board about the Internal Audit and control system reviews in Dubai work that has been rescheduled, what the compelling reasons for this change are and what is the degree of risk associated with the rescheduled work.

 

ERP systems and management systems: let's finally clarify

 What are we talking about when we use the expression “ERP systems”? And  what sets them apart , if any, from classic management systems (also called management software for companies)?

 A management software, also called a management system, is a very important tool for companies. It allows you to insert that automation component  that helps make the business modern  and in step with the times. Business management systems can be applied to the management of accounting, for example, or that of the warehouse, production processes or even financial analysis.

 Their evolution goes hand in hand with that of computers and technology: at present their power in terms of supporting individual business processes is practically infinite. They are one of the keys to the strategic support that every modern company needs, whatever its size. These software are not only accessible to everyone , but also easily adapt to each company , size and needs. The goal is to optimize time and resources in the organization of work, in production, in the general management of the company, obtaining practically immediate benefits by speeding up many processes.

 Management software for companies: programs that integrate all information

 How do they differ with ERP Accounting Software solutions in UAE? Basically, we are talking about management companies that belong to the same family, because the goal is the same: to improve business processes  and, consequently, also management . But in this case there is a further step forward. First of all, the acronym stands for  Enterprise Resource Planning , ie planning of business resources, and it is a management system that  integrates  all business processes in a single element . The company management, therefore, connects production, sales, inventory management of a warehouse, accounting, human resources and also aims at optimizing work in terms of efficiency and profitability.

 If, however, with a classic management system we dedicate ourselves to every single sector of the company, working independently, with the ERP we create a sort of IT interconnection between all sectors. Information in management software for companies runs faster and benefits from it is, for example, the management of production times: if information from warehouses or suppliers arrives quickly to those who manage production, it means that there is no risk of running out. of materials; if, in the same way, the integrated system communicates information on the request, one can imagine to model the production according to real needs.

 In short, the fronts that the use of an Erp system can open are many  and all very modern . Choosing to dive into the 4.0 era of industry with a solid Erp system is not only a sign of modernity, but also of intelligence. The goal is not only the speed of communication between the departments of the company (which also visibly improves), but rather the quality of these communications. Targeted, fast, effective.

 Business management or ERP: what to choose?

 Given the potential of Erp systems, it is clear that choosing what is closest to the needs of a company is a crucial step. If with classic management systems it is enough to simply assess the needs of a specific department, with these technologies it is necessary to proceed with a preventive mapping of business processes . Only in this way will it be possible to be sure of which type of ERP is best suited to the business model in question. It's a longer process at first, that's true, but it pays off in the distance. An Erp has a considerably longer life cycle than classic management systems: we are also talking about ten years of life, a period in which nothing remains static, indeed! Everything evolves hand in hand with technologies, and updates are a necessary and periodic step.

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Their extended life cycle translates into a greater impact on business mechanisms . An Erp is almost the backbone of a company, and once integrated it will no longer be possible to give up its benefits . They exploit the potential of the web, of course, but also of Cloud systems and this allows even the smallest companies and start-ups to take advantage of advantages  that would otherwise have been prohibitively expensive. All its activities and processing are strictly in real time and with certain more extended versions it can be expected  manage the dialogue with customers and customer care. By virtue of all these advantages, it is clear that there is also a difference in costs to be evaluated, but it is understandable given the total life cycle of an Erp, the work it does and the advantages it entails.

Audit contributes and Audit Add Value

 Internal audit, a component of the value chain

 Whoever has some experience as an auditor, whether internal or external, will have heard at least once that auditing is only a cost center for the organization. Whether this remark is pronounced without animosity or whether it is a criticism intentionally addressed to the listener, in both cases it is wrong. All the functions of an organization contribute to the creation of added value. Auditing, like the control professions, is no exception. Creating insurmountable boundaries between the management of the organization based on the notions of profit and cost is of little use and above all leads to unproductive considerations ... What distinguishes the professions is their degree of intervention and their positioning in the value chain allowing the organization to margin.

 A definition of added value

 Before concluding on whether or not a profession contributes to the development of added value, it is still necessary to agree on what the creation of wealth generated by an organization is. There is indeed an accounting definition of value added. This corresponds to revenue from sales less purchases and other external charges incurred to achieve revenue. If we stick to this vision of accounting, no direction within the organization could be considered as exclusively contributing value added! Each of them induces costs, including personnel costs, which are not included in the calculation of added value. Of course, it would be reductive to stay at this stage of reflection. Even if the accounting records all transactions, it does not say everything. We therefore prefer an economic approach to identify the added value, namely that it is the result of what is produced by an organization and whose value is greater than the cost of the means mobilized to allow this production. In other words, the organization creates something whose qualities exceed those contained in the resources employed for that creation and taken in isolation.

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 Levers and the environment for the development of added value

 The development of added value depends on levers and the environment. There are many levers. It may be technical innovation, investment in productivity, strengthening of the sales force, more optimal access to financial or natural resources, etc. The environment, for its part, relates to the conditions necessary for the creation of wealth. Some are external to the organization. The macroeconomic context, for example, is a determining factor for the growth of sales, and therefore of added value. In fact, we hardly create value without a buoyant market, just as security, quality infrastructure and sustainable institutions are necessary for the smooth running of business. On these imperatives, the organization alone has no means of action. On the other hand, internally,

 ·         The deployment of an ethic for the production of wealth in compliance with laws and regulations. It is not a question of creating in any way;

·         the management of activities based on ambitious objectives and framed by a budgetary process;

·         The implementation of internal control systems. We do not create wealth without taking risks.

 The auditor contributing to an environment favorable to the creation of added value

 It will be understood that internal audit has its place in the development of an environment favorable to the production of added value. Ethics is a recurring audit subject with regard to its impact on the governance of the organization. Then, the management of activities leads to an assessment of the effectiveness and efficiency of the resources employed compared to the objectives assigned. The internal auditor is also concerned here, since auditing is as much about ensuring that the mechanisms implemented within the organization are effective, even efficient, as it is about checking the compliance of operations. Finally, regarding the control of the risks taken to create wealth, the auditor is in his garden! Since then, difficult to reduce internal auditors in Dubai to a cost center without recognizing the slightest contribution to the development of its organization. On the other hand, the auditor will be careful not to intervene on the levers allowing an increase in business. Without this precaution, his independence, a sine qua non for the exercise of his profession, will be impaired.