Compliance vs. Internal Audit: Which Does Your Organisation Need?
Both internal audit and compliance serve important control functions in any organisation. Together, these teams can significantly reduce the risk of fraud or other forms of abuse. But what is the difference between these two? Read more to learn about the differences between compliance vs. internal audit.
The corporate compliance function makes sure that the company’s policies and procedures adhere to relevant laws, regulations, industry standards, corporate values and ethics, as well as corporate standards and policies.
In addition, the compliance function owns the compliance training programs and support auditing activities for key areas that run the risk of having fraudulent or criminal activities. They may either conduct compliance audit themselves or hire an external auditor for this purpose.
On the other hand, the mandate of the internal audit team is to ensure that the organisation’s internal control environment is adequate, efficient, and effective. Included in their role is the monitoring and evaluation of the compliance function itself, which is also subject to internal audit.
The internal audit department serves as an independent and objective body within the company that aims to add value to its various operations and processes. While they do not perform the monitoring function themselves, they can provide assistance in developing control and monitoring mechanisms for the different departments in an organisation. (Here’s what your internal auditors need to know before conducting an audit.)
Which is Better for Your Company?
So what does your organisation need? Depending on your size, you may have a separate or combined compliance and internal audit functions. If you prefer to have internal audit and compliance combined in one department, you can ensure collaboration between the two, but independence may be a challenge.
Regardless of your decision, it’s important that the internal audit and compliance teams complement one another, and that the structure of their teams should allow their members to maximise their individual skill sets. Moreover, there should be a clear distinction between compliance vs. audit roles.
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