In today’s article, we will address the importance of conducting external audits for your company’s management systems (MS).
External audit plays a crucial role in evaluating and ensuring the effectiveness of the company’s management systems. It involves the independent and unbiased analysis of processes, procedures, activities, and practices adopted by the company to achieve its objectives.
Moreover, as the saying goes, “A prophet is not without honor except in his own country,” it is possible that some issues with your MS might go unnoticed by your employees. Therefore, it may be worth considering hiring an external auditor.
Key reasons to conduct external audits
When it comes to the company’s management systems, there are many reasons why external audits need to be taken into consideration.
Here are some of them and their implications in the routine of this process:
- Independence and impartiality: External audits are conducted by independent and impartial professionals who are not directly involved in the company’s processes. This ensures an objective and unbiased evaluation of the management systems, identifying any potential problems or gaps.
- Compliance assessment: External audits evaluate whether the management systems comply with applicable standards, regulations, and requirements. This is particularly important in areas such as quality, environment, health and occupational safety, where regulatory compliance is essential.
- Identification of improvements: Through external audits, opportunities for improvement in the management systems are identified. Auditors can provide valuable insights and recommendations to enhance the efficiency, effectiveness, and compliance of the processes.
- Detection of risks and non-compliance: External audits help identify risks and non-compliance issues that can negatively impact the company. By identifying these points, the company can take corrective measures to mitigate risks and address non-compliance before they become significant problems.
- Credibility and trust: Conducting external audits demonstrates the company’s commitment to transparency, quality, and compliance with standards and regulations. This increases the credibility and trust of customers, suppliers, business partners, and other stakeholders.
- Benchmarking and comparison: External audits can also be used as an opportunity for benchmarking and comparison with industry best practices. External auditors can bring knowledge and experience from other companies, allowing them to identify areas where the company can learn and improve.
Objectives of external audits
External audits play a fundamental role in the company’s credibility. In most cases, it is through external audits that the company demonstrates or proves ethical values that impact all stakeholders.
In general, the objectives of external audits are:
- Ensuring compliance: Verify whether the company complies with laws, regulations, technical standards, internal guidelines, and other applicable obligations. This includes evaluating whether procedures are being correctly followed, internal controls are adequate, and the organization is meeting established policies.
- Assessing the effectiveness of internal controls: Internal controls are mechanisms implemented by the company to ensure efficiency, effectiveness, and compliance of processes. External audits analyze whether the established controls are functioning properly and identify areas where failures or improvement opportunities may occur.
- Identifying risks and vulnerabilities: External audits aim to identify relevant risks that may affect the company, such as operational, financial, information security, and legal compliance risks, among others. By identifying these risks, audits can provide recommendations to mitigate them and strengthen risk management processes.
- Ensuring the quality of financial information: External audits aim to evaluate the accuracy, reliability, and relevance of financial information presented by the company. This is essential to ensure transparency and instill trust in investors, shareholders, creditors, and other stakeholders in the financial statements.
- Identifying opportunities for improvement: External audits can identify opportunities to improve the efficiency, effectiveness, and profitability of the company through process improvements.
- Strengthening corporate governance: External audits contribute to strengthening corporate governance by providing an independent assessment of decision-making processes, risk management, and compliance with policies and regulations. This factor helps protect the interests of shareholders and improves transparency and accountability within the company.
Paving the path to success
In a world where corporate responsibility and accountability are increasingly valued, external audit is an essential practice to ensure transparency and proper corporate governance. It plays a crucial role in protecting the interests of shareholders, building trust with stakeholders, and achieving the company’s strategic objectives.
Through external audits, it is possible to assess whether the company is complying with applicable regulations, ensuring legal and normative compliance. Additionally, the identification of risks and vulnerabilities helps protect the company from potential harm and losses, enabling timely corrective measures.
External audit also contributes to the continuous improvement of management systems. By identifying opportunities for improvement, external auditors can offer valuable recommendations to optimize processes, enhance efficiency, effectiveness, and profitability of the company.
Furthermore, external audit brings credibility and trust to the company, demonstrating a commitment to transparency, quality, and compliance, thus strengthening the company’s reputation.