December 2020

VALUE ADDITION IN INTERNAL AUDIT

Deepjee Singhal | Manish Pipalia
Chartered Accountants

BACKGROUND

If one looks for a common definition of ‘value add’, it is the difference between the price of a product or service and the cost of producing it. The price is determined by what customers are willing to pay based on their perceived value. Value is added or created in different ways.

 

Historically, Internal Audit is treated as a ‘cost centre’ rather than a ‘value-added process’. That’s because the definition of ‘value add’ can vary from one firm / audit department to another. Mostly, it means improving the business rather than just looking at compliance with policies and procedures. But what is ‘value add’ to one practitioner may be different to another practitioner of internal audit. So how does one establish what is ‘value add’? This will be different in every case and also for each organisation. It has become common for most practitioners to claim that they deliver ‘value-added’ internal audit services, and for most stakeholders to speak of availing of ‘value-added’ internal audit services. The question, therefore, is ‘how does an internal auditor or internal audit team / department add value’ in a particular assignment or to the organisation?--->

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