The Function of Internal Audit in a Recession that's potentially coming

A recession can be one of the better times to go through an internal audit, or any type of audit, for that matter. It helps to assess the existing issues with the company and build out a navigational route towards success. This is whether it's the murky waters of a recession or fine-tuning the finances. Let's find out why internal audit in a recession is so important.

What is an internal audit all about?

At a high level, the intention of an internal audit is to help organizations identify and manage risks that could potentially happen. There are various types of internal audits to consider based on your company's needs. Still, they predominantly revolve around risk management, whether it's going to be financial or some other type of risk management. Internal audits aren't about trying to find something wrong and scold companies but finding the gaps and closing them out.

The reward is effective organizational management. This is beneficial for companies who know where their pain points are. They can then work towards improved operational efficiencies and improved risk management. This brings added value to their companies and helps push them just that much ahead of their competitors. This is whether it's due to reduced operating expenses or more compliant and effective processes.

Risk management itself covers a few different topics. For example, you may find yourself ensuring your compliance with local laws or regulations. On the other hand, you may simply want to ensure there's enough cash flow for the coming weaker months.

How does internal audit in a recession help secure you?

Many have been discussing a recession happening in 2023. This is not just in one area but throughout the globe in different markets. Yet having the right type of internal audits in place could be just what you need to help ensure the stability and health of the business. In fact, an internal audit is more important than ever. This is because it will help to optimize the overall business in several different areas.

It will help operational improvements

With the right type of internal audit, you’ll be able to streamline processes and have your ROI and ROA figures getting higher. In the case you see weaker sales and economic growth, you'll be able to run the operations with a leaner team and keep everything afloat.

It will help keep your cash flow healthy

An internal audit can look into your finances, see where the leak or waste of funds is happening, and work to close that out. That means operating, and other expenses will be kept at bay if we hit a recession. So it won't put the company into dire straits.

It can help keep you compliant

The last thing you want for your business is to get some type of penalty or fine anytime, recession or not. Having the right internal audit focused on compliance specific to your business will help you avoid those pesky fines you didn't budget to pay out in the first place.

Working with professionals

No matter what, whether you’re looking to run your own internal audits or work with audit professionals ourselves, that can help steer your internal audit, you want to ensure that the different touchpoints of your company are as fit as they can be.

This will help during those tough economic times during a recession. Or if we're able to avoid the coming recession, allow you to be in an optimal position to go full steam ahead and get yourself past the competition.