Is an Internal Audit Function Required by Law?

When Is An Internal Audit Function Required By Law?

Internal audit is a vital component of business management, which involves guiding organisations through careful analysis to achieve their ambitions and goals. Audits can help to identify areas where improvements and innovations can be made in structure or processes. There is often conversation around whether or not internal audits are required by law. Mizael Partners are here to break down exactly why internal audits are important, and in what circumstances utilising the internal audit function may be required by law.

Why is internal auditing important?

The primary role of an internal auditor is to provide assurance that an organisation’s internal processes are operating effectively. The internal audit function gives valuable insights on a particular company’s culture, procedures and policies. Internal audit reports can also help to verify that your real-time business processes reflect the documented policies and procedures outlined for clients or customers.

By providing the business with an unbiased view, the internal audit function adds value to the overall operation of your organisation. Through a thorough internal audit, you can better protect assets and evaluate risks. This can make a real difference in managing relevant stakeholders and improving the effectiveness of risk management techniques and strategies.

Is an internal audit required by law?

In some cases, it is not required by law to utilise the internal auditing function. However, depending on your line of work, an internal audit may be compulsory. Internal audits are risk-based and deal with both financial and non-financial operations. The ASX Corporate Governance Principles and Recommendations stated that if listed organisations are not utilising the internal audit function, they need to explain why.

The Australian Prudential Regulation Authority (APRA) has mandated a requirement for internal audit for financial institutions in one of its prudential standards. Many government agencies also require internal audit functions.

Regularly performing internal audits can help to ensure compliance with all relevant regulations and laws. It also helps to prepare your company for the next external audit. Client trust is crucial in running a successful business. For companies who evade the internal audit function, costly fines may apply which could negatively impact client confidence.

Conduct an internal audit for your organisation today

Provide your directors and audit committee with detailed information on the effectiveness of your organisation’s processes and operations by utilising the internal audit function. Mizael Partners can help your business conduct an unbiased, full internal audit. We will provide an in-depth report on our unique findings, in addition to recommendations for improvements.

With almost 18 years of experience in auditing, our audit team can ensure that all statements and documents are completely compliant with IFRS. We can also help prepare your business should you be facing an upcoming external audit .

For additional information on our services, speak to one of our accredited auditors today. Give us a call at 0468 228 000 and our friendly audit team will be happy to assist you further.

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About Mizael Partners

Mizael Partners is proudly run by founding director, Ryan Mizael. Ryan and his team have been providing innovative accounting, auditing, financial advisory, tax and cloud-based technology solutions since 2002.

Why Us?

  • We have a team of experienced chartered accounting professionals.
  • We specialise in accounting services for top companies.
  • We provide a wide range of services tailored to meet your needs.

Call Ryan Mizael at +61 (0)466 228 000 today for a personalised business accounting experience.