Internal Auditors and Their Roles in Consulting
Unlike the auditors who work in the accounting firm in Singapore, the internal auditors are responsible for monitoring the practices of their company, especially the issues that are related to the company’s finances (Also see Here’s How You Can Sort Out Your Messy Finances Into Shape) . The main job of internal auditors is to assess the financial information and the operating procedures of the company without being influenced by the management. However, if a company place them in a consulting role, they need to concentrate on a certain division rather than the whole company. As a result, a conflict of interest may arise between the duties of the consultants and the internal auditors.
What is an Internal Audit?
Internal audits (Also see The Importance of Having Internal Audits) will include three parties, which are the department being audited, the internal auditors, as well as the audit committee. Such audits (Also see How to Ensure Your Company’s Audit Process Goes Smoothly?) will concentrate on how that department operates in the company. The internal auditors will select some documents through random sampling, observe how the department functions, and assess the manuals. Apart from looking for the signs of fraud and mismanagement of assets, they will also perform testing on the controls of risk management. The internal auditors will report what they have found out in the audit process to the company’s audit committee. Then, the audit committee will review that report before meeting the manager of that department to have an in-depth discussion on the audit results.
How Do Auditors Work as Consultants?
A consultation is different from an internal audit. A consultation will only involve two parties, which are the department manager and the internal auditors. As consultants, the internal auditors do not have any responsibility in decision-making as well as management. Apart from observing the employees’ actions, they will review the procedures of that department. As consultants, they will provide the department with advice and suggestions so that it can improve. Also, they will collaborate with the managers in implementing the adjustments and help in training the employees.
Auditors versus Consultants
The company has to take some risks (Also see Introduction to Audit Risks) when they use internal auditors as consultants. Instead of working for the whole company, the internal auditors seem to work for a particular department when they perform their job as consultants. As a result, the internal auditors may lose their independence and objectivity. Besides, a conflict of interest may arise if the auditors have to oversee an audit they have performed from the consultants’ perspective. Furthermore, the number of internal auditors is quite limited. If a company use them as consultants, it may not have enough staff to perform company-wide audits.
The role of internal auditors is changing due to the requirement of the executives and the entrepreneurs. One of the major concerns of the management is to manage and control risk. The management nowadays does not only want audit reports from the internal auditors. Instead, it wants them to help in developing and implementing the company’s risk controls. Thus, internal auditors may continue struggling in an attempt to balance their increased role as the company’s consultants and their traditional objectivity and independence.