Internal audit is an in-house review process where a company examines its own operations, financial reporting, and internal controls. Unlike external audits (done by outside firms), internal audits are conducted by the company's own audit team.
The goal is to identify weaknesses, inefficiencies, fraud risks, and compliance gaps before they become serious problems. Internal auditors check whether policies are being followed and recommend improvements.
For example, an internal auditor might discover that the purchasing department is not following approval procedures, creating a risk of unauthorized spending. They report this to management with recommendations to fix it.