Internal Audit

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DEFINITION of 'Internal Audit'

The examination, monitoring and analysis of activities related to a company's operation, including its business structure, employee behavior and information systems. An internal audit is designed to review what a company is doing in order to identify potential threats to the organization's health and profitability, and to make suggestions for mitigating the risk associated with those threats in order to minimize costs.

BREAKING DOWN 'Internal Audit'

Regulations, such as the Sarbanes-Oxley Act of 2002, have increased corporate requirements for performing internal audits. They are important components of a company's risk management, as they help companies identify issues before they become substantial problems. They also help identify risky behavior by individual employees and threats posed by outside parties, such as attempts to steal intellectual property.

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RELATED FAQS
  1. What's the average salary of an audit clerk?

    Audit clerks, along with bookkeepers and accountants, earn an average salary of $35,170 per year, which is the equivalent ... Read Full Answer >>
  2. What are some examples of general and administrative expenses?

    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>
  3. How do dividend distributions affect additional paid in capital?

    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  4. Why can additional paid in capital never have a negative balance?

    The additional paid-in capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >>
  5. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

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