How Internal Audit Value Adds and Reduces Compliance Costs
We all have heard that internal audit is supposed to add value to the organization when it provides objective and relevant assurance, and contributes to the effectiveness and efficiency of governance, risk management, and control processes.
We also have heard that compliance costs typically increase as a result of local, national, and international regulations around an industry increase. There is a positive correlation between compliance cost and regulatory maturity. Global companies that have operations in multiple jurisdictions with varying regulatory regimes naturally face much higher compliance costs.
In a typical internal audit, the auditor provides an independent, objective assurance and consulting activity to improve an organization’s operations by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
In a value-adding internal audit, the auditor evaluates current technologies and emerging regulations to further improve operating efficiency as well as identifies opportunities to enhance control process. The auditor would also recommend your company cost-effective and forward-looking controls by incorporating the latest technologies to streamline control activities and complying with new regulations. Value-added internal audit should include recommendations that further enhance risk identification and risk mitigation processes.
As a result, value-added internal audit should prepare your company well ahead of regulatory changes instead of implementing new or additional control measure to comply with new regulation as and when they take effect. It allows your company to stay ahead of the regulatory changes instead of implementing ad-hoc control measures to keep up with the ever-changing regulatory environment. represents. Your management team will be able to plan ahead to encounter less operational constrains in resources and limit the increase in compliance costs, thus maintaining sufficient resources to develop other areas of business activities.