Internal Audit

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.

INVESTOPEDIA EXPLAINS '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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