At Whytax, we specialize in providing robust Internal Audit Services tailored to help organizations improve their governance, risk management, and internal controls. Our team of qualified internal auditors and subject matter experts bring deep industry knowledge and technical expertise to ensure that your organization not only meets regulatory requirements but also strengthens its operational effectiveness.

Introduction to Internal Audit

Internal Audit is a cornerstone of corporate governance. It provides independent, objective assurance designed to add value and improve an organization’s operations. By evaluating internal processes and controls, internal audit helps businesses identify inefficiencies, prevent fraud, and ensure compliance with applicable laws and standards.

At Whytax, we provide scalable and customized internal audit solutions that align with your business objectives, industry regulations, and internal policies.

What is an Internal Audit?

Internal Audit is an independent, objective function that examines and evaluates an organization’s operations, risk management practices, and internal control systems. It assists in identifying weaknesses, safeguarding assets, ensuring financial accuracy, and promoting efficiency.

It is not just a compliance tool but a strategic function that helps organizations manage change, foster transparency, and achieve their long-term goals.

Scope of an Internal Audit

We believe the scope of an internal audit is no longer limited to just financial checks. In today’s dynamic business environment, internal audit must act as a strategic enabler that reviews the full spectrum of enterprise risk, operations, and performance.

1. Governance and Strategic Oversight

• Review of board governance structures and ethical frameworks
• Alignment of organizational strategy with execution

2. Operational Efficiency & Effectiveness

• End-to-end process audits (procurement, sales, inventory, etc.)
• Benchmarking performance against industry best practices

3. Risk Management and Internal Controls

• Evaluation of the Enterprise Risk Management (ERM) framework
• Testing of control design and operational effectiveness

4. Regulatory and Statutory Compliance

• Verification of compliance with local, national, and international regulations
• Review of tax filings, labour laws, industry-specific rules (SEBI, RBI, etc.)
• Ensuring timely compliance to avoid fines and reputational damage

5. Financial Accuracy and Reporting

• Validation of financial transactions, journal entries, and reconciliations
• Review of accounting standards (IND AS, IFRS, GAAP)

6. Fraud Prevention and Detection

• Proactive controls to detect anomalies or red flags
• Forensic audits and fraud risk assessments

7. Information Technology & Cybersecurity

• Evaluation of IT general controls and automated systems
• Cybersecurity posture assessments

9. Human Resource and Payroll Audits

• Compliance with labour laws and employee benefit schemes
• Payroll accuracy and HR policy adherence

Who Needs an Internal Audit?

Internal Audit applies to organizations that:
• Operate in regulated industries (banking, healthcare, telecom, energy)
• Are listed companies or subsidiaries of listed entities
• Meet thresholds under laws such as the Companies Act, 2013:
o Turnover > ₹200 crore
o Outstanding loans/borrowings > ₹100 crore
o Deposits > ₹25 crore

Types of Internal Audit Services

1. Operational Audit – Evaluates efficiency and effectiveness of operations
2. Compliance Audit – Assesses adherence to laws, regulations, and internal policies
3. Financial Audit – Verifies accuracy and completeness of financial records
4. Information Systems Audit – Reviews IT systems and data security
5. Environmental Audit – Ensures sustainability and environmental compliance
6. Forensic Audit – Investigates frauds and irregularities

Steps to Appoint an Internal Auditor

1. Internal Needs Assessment
2. Defining the Audit Charter & Scope
3. Evaluating the Mode of Appointment
4. Selection of Auditor(s)
5. Board-Level Appointment & Resolution

Once the internal auditor is identified:
• Prepare a formal Board Resolution detailing:
o Name and firm of the auditor
o Term and remuneration
o Scope and reporting structure
• Hold a Board Meeting or Audit Committee Meeting (if applicable) to approve
• Document the resolution in official minutes of the meeting

6. Documentation, Reporting, and Communication
Once appointed:
• Sign an engagement letter or contract, clearly outlining:
o Objectives
o Deliverables
o Confidentiality
o Reporting schedule and escalation protocol
• Notify internal stakeholders for facilitation of audit work
• Create an annual audit calendar to plan and track execution
• Submit necessary disclosures in the Board Report or Annual Return, where required

Penalties for Non-compliance with Internal Audits
Non-compliance can lead to significant risks and penalties. As per Indian law (Section 450 of the Companies Act, 2013):
• Companies may face fines up to ₹10,000, and a further ₹1,000 for each day of continued non-compliance.
• Reputational damage and loss of stakeholder trust
• Legal action for failing to detect fraud or errors

FAQs – Internal Audit Services