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Internal audits impact an organization’s performance

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Internal audits impact an organization’s performance

The research question to be discussed in this paper is to do internal audits impact an organization’s performance. Many studies have been conducted on this research topic. Therefore, this research paper aims to provide an informative overview of how internal audit influence organizational performance. The research paper will research questions by reviewing several studies that have been carried out by researchers. Keywords: internal audit, organizational performance, financial performance, risks, system audit, internal auditors.

 

Internal audit is an important exercise that plays a significant role in improving the performance of an organization. Momeni and Nakhaee conducted a research study that focused on investigating the impact of internal audits on Melli bank branches’ performance in Zahedan. The study found out that internal audit plays a key role in enhancing employees ability, organizational behavior, customer satisfaction, staff discipline and employee personal development, which leads to improvement of the entire firm performance (Momeni and Nathan).

 

The importance of internal auditors is to identify crucial risk factors affecting the performance of an organization. This allows a firm to forecast future risk exposures and also the current threats and weaknesses. Alflahat carried out another study that helps to discuss the research question on this paper. It focused on the effects of internal audit on the performance of various companies found in Jordan. According to the study, an internal audit has a key impact on an organization’s overall performance (Allah).

 

Internal audit helps the management team improve internal organizational controls, which involves identifying any threats and weaknesses affecting the system. It also helps the management identify strategies that can be implemented to overcome challenges affecting the performance of an organization. The study carried out by Awdat investigated the effect of internal audit on the commercial banks’ financial performance in Jordan. According to research, effective internal audits exercise, and assessment of internal audit processes, activities, and risk exposures are described as a meaningful approach to improving the organization’s financial performance (Awdat).

 

Internal audit also assists in managing an organization’s financial performance since the source audit report provides the true initial information of each financial transaction. Moreover, carrying out control and system audits in an organization at different stages is an effective means of improving its performance (Kibwana and Nyarobe). The study by Ali determined how internal audit affect the financial performance of Kenyan microfinance institutions. The research established that internal audits have a positive impact on the financial performance of the organization. However, according to this study, internal audit components such as internal audit controls, standards, and professional competence do not influence organizational financial performance (Ali).

 

Conclusion

In conclusion, the research paper finds out that internal audit is an important exercise that improves financial performance and the overall organizational performance. Internal audit helps an organization identify areas for improvements and procedures that need to follow efficiently. In addition, internal audit ensures that efficient procedures and processes are put in place in an organization and helps manage risk in the organization.

 

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