Implementing Internal Audit Functions in Growing Enterprises
Building Controls, Transparency, and Strategic Confidence
Internal audit, often misunderstood as a tool only for large or listed corporations, is in fact a vital function for growing businesses. It strengthens governance, ensures compliance, and provides assurance to investors and stakeholders that risks are actively managed.
Strengthening governance begins in the boardroom. Internal audit functions provide decision-makers with independent insights to guide growth and risk management.
Pitfalls and Opportunities
1.) Governance Blind Spots
Growing enterprises often rely solely on operational reports, leaving directors with limited oversight.
Opportunity: Internal audit gives boards an independent view of risks and controls.
2.) Control Gaps and Fraud Risks
As transaction volumes grow, oversight becomes more difficult. This creates exposure to errors and misuse of resources.
Opportunity: Audits of procurement, payroll, and disbursements detect issues early and reinforce accountability.
3.) Compliance Overload
Tax filings, labor rules, and PFRS updates multiply as companies expand. Missing one requirement can affect funding and trust.
Opportunity: Internal audit ensures ongoing alignment with BIR, SEC, DOLE, and FRSC requirements.
4.) Technology and Transformation Risks
ERP rollouts, outsourcing, and automation improve efficiency but create new risks.
Opportunity: Internal audit validates data integrity, cybersecurity, and workflow controls during transitions.
5.) Investor and Stakeholder Confidence
Partners and financiers expect governance maturity. Without an audit function, credibility may stall growth plans.
Opportunity: Independent audit reporting signals resilience and transparency.
Action Framework
Define Scope and Authority
Establish an audit charter approved by the board to secure independence.
Resource Strategically
Begin lean through outsourcing or co-sourcing, then scale with complexity.
Adopt a Risk-Based Plan
Focus first on compliance, financial reporting, procurement, and IT.
Report and Follow Through
Provide actionable recommendations and monitor corrective actions.
Invest in Audit Training
Strengthen skills in financial, IT, and regulatory areas.
Boardroom Takeaways
Internal Audit
builds resilience and credibility
Governance
gaps shrink when reporting goes beyond operations
Technology-Driven Changes
require early audit involvement
Prioritize Transparency
as an enterprise valued by stakeholders
Triggers for Action
Consider launching an internal audit function when:
Preparing
for Fundraising or IPO Readiness
Expanding
into New Markets or Industries
Managing
Subsidiaries or joint ventures
Rolling Out
Digital Transformation Projects
Conducting
Annual Governance Reviews
Build internal audit frameworks that fit the size, sector, and strategy.
Official manual outlining internal audit policies, standards, and procedures applicable to government entities. Useful reference for private enterprises adapting audit frameworks.
