An internal audit is an independent, objective assurance and consulting activity conducted by an organization to evaluate its risk management, control, and governance processes. It helps the organization achieve its objectives by improving operations and ensuring compliance with policies, regulations, and industry standards.

Internal audit is essential for identifying risks, enhancing operational efficiency, and ensuring adherence to policies and procedures. It provides management with valuable insights on how to strengthen internal controls, improve governance, and mitigate potential risks, ultimately contributing to the success and sustainability of the organization.

The primary objectives of internal audit include:

1. Risk Management: Identifying, evaluating, and mitigating risks that could impact the organization.
2. Control Evaluation: Assessing the effectiveness of internal controls to ensure compliance with policies and procedures.
3. Operational Efficiency: Reviewing processes to identify areas for cost savings or efficiency improvements.
4. Compliance: Ensuring adherence to laws, regulations, and internal policies.

Internal audit is conducted by the organization's employees or an internal audit department, whereas external audit is carried out by independent auditors. Internal audit focuses on evaluating and improving internal processes, risk management, and control systems for the benefit of management. In contrast, external audit provides an independent opinion on the accuracy and fairness of the financial statements for external stakeholders.

Internal audit typically reports to the audit committee of the board of directors or directly to senior management. This reporting structure ensures that internal auditors have the independence and authority needed to conduct audits objectively, without interference from operational management.

The frequency of internal audits depends on various factors, such as the organization’s size, industry, complexity, risk profile, and regulatory requirements. Critical or high-risk areas may be audited annually, while lower-risk areas could be audited less frequently. Organizations usually develop an internal audit plan based on a risk assessment to determine the appropriate audit schedule.