In Cameroon, one underutilized accounting practice that many businesses small businesses are unaware of is internal audit. Even though this article is not going to be a 3 months course on internal audit we will try to provide a base for internal audit information for our audience. This will help you to understand and utilize these tools for your business.

What is Internal Audit

The Institute of Internal Auditors defines an internal audit as a system geared to provide independent assurance that an organisation’s risk management, governance and internal control processes are operating effectively.” During an Internal Audit, the operations of organizations are examined to ensure operations are moving efficiently, that the risk of fraud and theft is limited to a very low degree, and functions are properly segmented in the business.

Most of the time, In Cameroon, we advise that small business perform an internal audit in the scope of three different performers:

1. The owner can perform the internal audit process. This will be what is most possible for most small businesses as they may not have the necessary funds to hire external staff. Internal audit is a fundamental management practice for owners to ensure their processes are operating efficiently and the opportunity for theft and fraud are kept at a low level. But for the beginning, it is important to find a consultant to help guide you and put some professional knowledge in building some internal audit practices.
2. Another option for small and medium-sized businesses is hiring an internal auditor. He will operate as part of the accounting department and would report directly to the owner of the business
3. You could also outsource the internal audit function to a third-party firm. These third-party firms usually have the expertise to set up an internal audit function or perform the internal audit process for a client.

Basic internal Audit processes for Cameroonian small and medium-size Businesses Owners

Segregation of Duties

Division of task and duties is the internal audit in it’s’ most basic form, the segregation of duties in business should include the following three functions being performed by different employees: management of assets(inventory, goods and raw materials), approval of transactions affecting those assets (sales of inventory), and recording/reporting these transactions. If a business owner can separate these functions, they will make their processes more secure. If your business does have enough employees to separate these functions, they should take a larger supervisory role in these processes to lower the chance of theft or fraud by an employee.

Document Business practices and policies

As the business grows, so should the amount fo documented policies and procedures. As a part of the risk assessment for your business, you should identify which functions will benefit from the written policies and procedures to reduce the risk of negative outcomes to the business. One of the most important departments with written policies should be the human resource department if your business is hiring employees.

Identify areas of Possible data loss

No matter which sector a small business is working on, information and data loss are vital to the running of its operations. A business should have an ongoing assessment of potential threats to their information and data. If possible you should have a well-classified shelf with all the important documents. For digital documents containing valuable data and information, this should be back up online in google drive or some other system.

Compliance with legal and tax laws

Make sure your company complies with legal and tax laws as that could be a possible source of financial loss through fines and penalties. If a company is unsure about the compliance requirements, they can consult an expert to ensure they are meeting all their requirements.

The regularity of Internal Audit

We advise that small and medium-sized businesses do an internal audit of all it’s most important documents at least once a year.

Bluemoon outsourcing is highly skilled in internal control development and effective internal audit performance. Contact us if you are looking to Optimize your business process.