Internal Auditor Recommendation Brief
Since Somerset Company has an out-of-control system, the company would be subject to audits from the SEC about their financial statements. In order to prevent this from happening, Somerset should consider hiring an Internal Audit Team of three people. The main focus would be to hire an Internal Auditor that would communicate what is required to prevent fraud, safeguard assets, financial reporting standards and to ensure that the company is in compliance with the SEC regulations. The internal auditor would improve Somerset’s internal controls. In this an explanation of the benefits of hiring an internal auditor, describe the qualifications and qualities needed for an internal auditor for this type of company and a recommendation of an internal auditor that meets the benefits and qualifications for this company.
An Internal auditor and the team can validate the company’s internal controls and perform tests for fraud, negligence or waste. Internal auditors ensure that the internal controls are adequate and evaluate the company’s financial and information systems for accuracy. In addition to the benefits of hiring an internal auditor would provide the company a variety of audit services such as operational audits, fraud audit, compliance audits and financial statements audits. Operational audits are the most beneficial to Somerset’s needs in controlling their out of control systems. “An operational audit is a systematic review and evaluation of an organizational unit to determine whether it is functioning effectively and efficiently, accomplishing established objectives and goals and utilizing all of its resources appropriately” (Reference for Business 2011). Operational audits also uncover any potential problems that may arise in the financials and can be fixed by the auditors.
Another type of audit that would be beneficial to…...