What is CA Tushar Makkar known for?

CA Tushar Makkar is known for being AIR 47 in CA Final and creating India's largest audit community.

What services does CA Tushar Makkar offer?

He offers audit resources, courses, and expertise to chartered accountants.

What Are the Benefits of Practical Internal Auditing?

Practical internal audit is a process of evaluating an organization's operations, policies, and procedures to ensure compliance with industry standards and regulations. It is a crucial aspect of an organization's governance, risk management, and compliance framework. Practical internal audit provides a range of benefits to organizations, including enhancing operational efficiency, mitigating risks, improving compliance, and providing valuable insights into the organization's performance. In this article, we will discuss the benefits of practical internal audit in detail.

16 September, 2026

Ask any CA student what internal audit is and you will get the textbook line — "an independent, objective assurance and consulting activity designed to add value." Full marks in the exam. Zero help on day one of the assignment.

Because when you actually sit at a client's factory, nobody hands you a definition. Somebody hands you a file of 400 purchase orders and says, "Sir, thoda check kar lijiye."

That gap between the definition and the file is exactly what practical internal auditing fills. And honestly, it is the most underrated skill a commerce professional can build in India right now.

What "Practical" Internal Audit Actually Means

A statutory audit asks one question: are the financial statements true and fair?Internal audit asks a very different one: is this business actually running the way management thinks it is running?

Nine times out of ten, the answer is no. Not because of fraud. Because of habit, shortcuts, and people who left the company three years ago.

Benefit 1: It Works as an Early Warning System

Internal audit catches problems while they are still small enough to fix.

Real example: At a mid-sized FMCG distributor, the sales team was issuing credit notes to dealers for "damaged stock." The amount was small enough that statutory audit never flagged it. Internal audit pulled 60 credit notes and asked one boring question — where is the damage report? Forty of them had none. Annual leakage: around ₹18 lakh.

No fancy tool. Just one question, asked consistently.

Benefit 2: The Company Becomes

Process-Dependent, Not Person-Dependent

Every Indian business has a "Ramesh bhaiya" — the one person who knows how the stores work, which vendor to call, where the old bills are kept. If Ramesh bhaiya resigns, the department stops.Internal audit documents the process, builds an SOP, and removes that dependency. This single benefit is why growing companies and family businesses call internal auditors even when the law does not force them to.

Benefit 3: It Plugs Real Money Leakage

This is where internal audit pays for itself. Common leakages you will find in Indian companies:

Scrap sales in manufacturing units recorded without weighbridge slips
Vendor advances lying open for two or three years with nobody following up
Duplicate payments to the same invoice number in different months
GST input credit claimed in books but not appearing in GSTR-2B
Freight bills paid at rates higher than the approved rate card

None of this requires genius. It requires someone who reconciles instead of assuming.

Benefit 4: It Keeps You Ahead of Compliance Trouble

Under Section 138 of the Companies Act, 2013, read with Rule 13 of the Companies (Accounts) Rules, 2014, internal audit is mandatory for certain classes of companies — based on turnover, paid-up capital, borrowings, and deposits. Listed companies are covered in all cases.

But the compliance benefit goes beyond the Companies Act. A good internal auditor picks up TDS applied at the wrong section, PF not deducted on a component of salary, or e-way bills missing for high-value dispatches — months before a departmental notice arrives.

Benefit 5: What Internal Audit Does For Your Career

Now the part most students miss.

Statutory audit teaches you standards. Internal audit teaches you business.

You learn how money actually moves — procurement to payment, order to cash, hire to retire. That understanding is what a CFO role is built on.
You learn to speak to seniors. You will sit in front of a plant head who has run that unit for 20 years and explain why his process has a gap. That skill compounds for life.
It opens multiple doors. Risk advisory, IFC/ICFR testing, forensic audit, process consulting, and in-house roles in risk and compliance all start here. The CIA (Certified Internal Auditor) qualification builds on the same base.

Many CAs discover their favourite work is internal audit only after they have spent three years signing tax audits.

Ready to master Internal Audit beyond theory?

Learn how to approach real audit assignments, identify control gaps, spot financial leakages, and prepare practical audit findings with our Master Blaster of Internal Audit.

How to Build Practical Internal Audit Skills

Always do a walkthrough first. Follow one transaction end to end before you touch a sample.
Ask "who can override this control?" That question finds more than any checklist.
Write findings using the 5C format — Criteria, Condition, Cause, Consequence, Corrective action. Management reads this. They ignore vague paragraphs.
Learn Excel properly. Duplicate detection, VLOOKUP reconciliations, pivot-based trend analysis. This is 80% of audit analytics.

Final Thought

Internal audit is not policing. It is helping a business see itself clearly.

Learn it practically — not just for a paper, but for the skill — and you will find that it makes you more useful than almost anything else on your CV.

Frequently Asked Questions (FAQs)

1. What is practical internal auditing?

Ans. Practical internal auditing focuses on applying audit concepts to real business processes. It involves reviewing transactions, identifying control gaps, detecting financial leakages, checking compliance, and suggesting practical improvements rather than relying only on theoretical knowledge.

2. What are the main benefits of practical internal auditing?

Ans. Practical internal auditing helps companies identify problems early, reduce financial leakages, improve internal controls, strengthen compliance, document processes, and reduce dependence on individual employees. It also helps management make better business decisions.

3. How does practical internal auditing help CA students and professionals?

Ans. It gives CA students and professionals a better understanding of how businesses actually operate. They learn about procurement, sales, inventory, payroll, compliance, risk management, and internal controls. These skills can also create opportunities in risk advisory, forensic audit, IFC/ICFR, consulting, and in-house risk and compliance roles.

4. How can I develop practical internal audit skills?

Ans. Start by learning through real-world transaction walkthroughs and understanding a process from beginning to end. Practice identifying control gaps, preparing audit findings using the 5C approach, and using Excel for reconciliations, duplicate detection, and data analysis. Practical exposure through assignments or an internal audit course can further strengthen these skills