Internal audit – a necessity or an unnecessary expense?

Internal audit is often seen as an activity primarily concerned with control and compliance. But behind this notion lies a far more fundamental role – that of a strategic partner in the management of the organisation. When applied with purpose and a business-specific approach, it becomes a source of real value that supports efficiency, reduces risk and contributes to sustainability.

Cost or investment – the answer depends on how management perceives the audit function. Where it is integrated into the management culture, the benefits are clearly measurable: better risk management, transparency, assurance and increased trust from investors and partners.

What does an internal audit actually do?

The purpose of an internal audit is not just to find errors. It is aimed at assessing the effectiveness of internal processes, control systems and risk management. Audit work provides independent feedback to management on whether the organisation is operating in accordance with its own objectives, policies and regulations. It also flags potential risks that would otherwise go unnoticed.

Benefits that are often underestimated

Many companies see internal audit as an obligation imposed by legislation or by the requirements of external stakeholders. However, this is a limited view. Effective internal audit can:

• improve internal accountability and transparency;
• uncover hidden inefficiencies and missed opportunities;
• minimize the risk of financial loss, fraud or regulatory sanctions;
• accelerate strategic decision making through reliable information;
• enhance owner, shareholder and customer confidence.

Real Costs vs. Lost Benefits

In assessing the costs of internal audit, the cost of inaction is often underestimated. Missed risks, delayed responses to irregularities, loss of reputation or errors in key processes can cost many times more than the investment in a well-structured audit. The real question is not “How much does it cost?” but “How much does the lack of it cost?”

In which cases is internal audit key?

• In fast-growing companies where controls are struggling to keep pace with growth;
• When entering new markets or products;
• When reorganising or changing ownership;
• When there are external requirements from banks, investors or regulators;
• When there is a desire to increase operational efficiency and transparency.

Internal audit is far from an unnecessary expense. It is a modern management tool that brings value far beyond its financial cost. Companies that embrace it as a partner, not just a control mechanism, stand a better chance of sustainable growth, lower risks and a stronger position with investors and markets.

TPA Bulgaria

+359 2 981 66 45/46/47

office@tpa-group.bg

128, G.S. Rakovski str, floor 2

1000 Sofia