Mayank has recently started as a Company Secretary in Practice. He has got an assignment of internal audit. Advise Mayank about internal audit and its stepwise approach.

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Step-wise process Establish and communicate the scope and objectives for the audit to appropriate management. Develop an understanding of the business area under review. This includes objectives, measurements and key transaction types. This involves review of documents and interviews. Flow charts and narratives may be created if necessary. Describe the key risks facing the business activities within the scope of the audit. Identify control procedures used to ensure each key risk and transaction type is properly controlled and monitored. Develop and execute a risk-based sampling and testing approach to determine whether the most important controls are operating as intended. Report issues and challenges identified and negotiate action plans and solutions with management to address the problems. Follow-up on reported findings at appropriate intervals. Internal audit departments maintain a follow-up database for this purpose.