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Simple English definitions for legal terms
internal audit
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A quick definition of internal audit:
Internal audit is a process where a company checks its own financial records and operations to make sure everything is correct and legal. It's like a company checking its own homework to make sure it's done right. This helps the company find and fix any mistakes or problems before they become bigger issues.
A more thorough explanation:
Internal audit is a process of reviewing and evaluating a company's financial and operational activities by an independent team within the organization. The purpose of an internal audit is to identify areas of risk and provide recommendations for improvement.
For example, a company may conduct an internal audit of its accounting department to ensure that financial records are accurate and comply with accounting standards. The internal audit team may review financial statements, invoices, and other financial documents to identify any errors or discrepancies.
Another example is an internal audit of a company's supply chain management. The internal audit team may review the company's procurement process, inventory management, and logistics to identify any inefficiencies or areas for improvement.
Overall, internal audits help companies improve their operations, reduce risks, and ensure compliance with laws and regulations.