What is an Internal Audit?

What is an Internal Audit?

Internal Audit

As a business owner, unless your company is dormant, zero-revenue or threshold qualified, you need to engage an audit firm in Johor Bahru to conduct an external audit annually (Also see Introduction to Audit). Meanwhile, you may carry out internal audits in your firm for early detection of any problems or issues that may arise throughout the operation of your business.

Typically, an internal audit will issue its report (Also see What are the Current Audit Files and Permanent Audit Files) to the related parties, including the board of director, auditee as well as the audit committee. Unlike external audits, internal audits usually will not give opinions. Instead, they offer conclusions on what the auditors have found throughout the process of internal audit.

As an instance, after an internal audit has ended, the auditors will conclude on matters such as the vital internal control problems, or non-compliance with internal regulations and policies (Also see Criteria That Auditors Should Cover in a Restaurant Audit). Generally, an auditor will prepare the conclusion of internal audit opinion according to the objective and the scope of an internal audit.

If an entity has assigned an auditor to analyse its internal control over inventories management, then after they finish auditing, they need to reveal all the weaknesses of the internal control as well as the vital problems they discovered which are related to the management of inventories. The auditors should also provide management with some implication and suggestions.


As an instance, since there are some concerns from the board of directors and the audit committees, a company has assigned the internal audit department to carry out internal audit tasks in the payroll department (Also see How Does Internal Control Help in Overcoming Payroll Fraud).

After the auditors have carried out the audit tasks, according to the structure of an organisation, the internal audit department needs to issue an audit report to the Director or GM as well as the head of Human Resources on the result of the audit.

The internal audit department needs to give its conclusion on the crucial matters they have found, as well as the rating of the related control in the report.

In conclusion, internal audits will not issue opinions like external audits. However, it issues the audit report that reveals all its findings, implications and suggestions with the audit rating. The auditor will provide audit rating according to the nature of risks as well as the subsequent risks which may influence the operation or development of a company (Also see How to Plan for Internal Audits Schedule Based on the Risks?).


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