Internal Audit and Good Governance

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Good governance is the starting point of successful business strategies. Governance is the means through which goals are established and achieved in order to address the needs and expectations of stakeholders. It is a best practice that ensures the credibility of the government.

This is why; recently the need for proper governance has increased. Along with that, the need for proper internal audit has also come about. This is primarily because the need to prevent risks (like bankruptcy and identity theft) has increased.

How Auditing Promotes Good Governance

The United Nations recently identified some best practices of good governance. These features focus on improving functioning and performance of the public sector. The four best practices include:

  • Transparency: Information regarding investments and decisions taken must be available for stakeholders whenever they want information.
  • Public accountability: Managers or CEO’s taking decisions must be accountable for their decisions. Therefore, decisions and changes made must be documented.
  • Effectiveness or Efficiency: The output from employees must be optimal. This will prove that the company has good governance.
  • Responsiveness: How soon the system responds to changes in policies is also proof of good governance.

This means that good governance provides unbiased assessment of the enterprise and its employees. Governance auditing is the cornerstone of good governance. It helps maintain integrity and accountability of the company. This preserves the confidence and interest of stakeholders in the company. Therefore, governance auditors play an important role in supporting governance responsibilities.

A complete insight into the best practices involved in the business process helps decision makers make the right choices. This is possible because internal audits present details on finances and performance. It also assists with investigation and advisory services in the organization. This helps improve output from employees.

Internal audit promotes organizational independence. The system enables the organization to take important decisions independently. Additionally, internal auditing helped with budget management for sufficient funding. Moreover, because internal audit facilitates best practices and improves governance, hiring competent staff becomes possible.

Conclusively, having a proper internal audit system has a positive impact on governance best practices.

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