In commenting on the value that internal audit can provide to your organisation, it's probably worthwhile also explaining some of the major differences between external audit and internal audit.
An external audit is a review of your organisation’s financial records to provide an opinion as to the truth and fairness of your organisation’s financial statements (Profit and Loss, Balance Sheet). It's designed to provide assurance to external parties, such as shareholders, investors, creditors and other stakeholders that the organisation’s financial performance and financial position are true and fair as reported by management in the financial statements. External audits are undertaken by professional auditors who are external and independent from the organisation and its management.
Internal audit, on the other hand, is an independent, objective and systematic review of your organisation’s activities designed to provide assurance to your own management that the system of internal controls implemented is operating efficiently, effectively and economically to ensure your organisation achieves its objectives. It does this by undertaking an analysis and assessment of your organisation’s data and business processes to identify any areas where your organisation might be exposed to the risk of losses of income or assets through waste, abuse and fraud.
An internal audit adds value by being a source of independent advice to your organisation's management and recommending appropriate cost-effective controls where your organisation might be exposed to the risk of such losses. Apart from recommending improvements to the system of internal controls, the audit report provided to your management will include details of any identified errors, omissions and instances of non-compliance with statutory obligations. In this regard, internal audit is management’s virtual watchdog within your organisation. Knowledge that your organisation utilises a program of periodic internal audits of its operations also serves as a deterrent against fraud by employees.