BENEFITS OF INTERNAL AUDIT :

(i) Proper Accounting System: The benefit of internal audit is that proper accounting system is introduced. Accounting system is a chain of activities in an entity by which transactions are processed for maintaining financial record. There is a need of orderly devices to achieve desirable results.

(ii) Better Management: The benefit of internal audit is that there is better management of business concern. The auditor can point out the weak areas of management. The goals of business can be achieved if there is proper internal control, internal check and internal audit. It should be noted that management could rely on internal audit for best results.

(iii) Progressive Review: The internal audit is beneficial to review progress of a business concern. The figures of previous years are compared with this year. Moreover the performance result of similar companies can be compared to determine the progress made by the entity. The management can review progress through internal audit.

(iv) Effective Control: The internal audit is helpful to have effective control over business activities. Control is a management function, which is related to supervision and direction of ongoing activities. The manager concerned can remove the difficulties for smooth working of business.

(v) Assets Protection: The assets protection is possible through internal audit. The management can use the assets for the benefit of business only. The assets cannot be used for private purposes. The embezzlement of cash, misappropriation of stock and misuse of other assets is not possible as the internal auditor keeps close watch over assets.

(vi) Division of Work: The internal audit is helpful to apply division of labour. The division of labour is necessary to watch the activities of all employees including management. The auditor can suggest the way and means to improve the performance of business.

(vii) No Error and fraud: The internal audit is used to protect accounting records from errors and fraud. Theccounting and auditing go side by side when accounting work is over the audit will start. In such situation errors and fraud committed by the accounting staff will easily be detected and rectified.

(viii) Fixing Responsibility: Internal audit is used to fix the responsibility of people having poor performance. The management establishes the performance standards. The internal auditor can evaluate the result of all persons. The people can be held responsible for below standard work and action can be taken against them.

(ix) Helps External Auditing: The work performed by internal auditor can help external auditor in carrying out the audit. The audit procedure of internal and external audit is almost the same. The auditor can go through the internal audit report at the time of starting audit work. Anyhow external auditor is responsible for external audit.

(x) Performance Improves: Internal auditor is helpful to improve the performance of the organization. The achievements of previous year are the basis of preparing budget for the next years. The projected income statement and balance sheet are drawn up. An attempt is made to get the positive result. Thus internal audit improves performance of business and employees.

(xi) Proper Use of Resources: Internal audit is used to check the proper use of resources. The misuse of resources can increase the cost of organization. The optimum use of resources can be determined to control the cost of output. In this way internal audit is a tool to use the resources in the best interest of the business.

(xii) Investigation: Internal audit is of help to investigate in to the business matters. In case of doubt internal auditor can be asked to examine the facts and figures to confirm or clear any doubt. The internal auditor can investigate the matter in any manner. Such investigation can be made at the request of management or owners.