EIJMRMS ISSN: 2750-8587
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23
REPLACE INTERNAL AUDIT IN ENSURING SUSTAINABLE ECONOMY
Zokirjonova Sarvinoz Shokirjon qizi
"Tashkent Institute of Irrigation and Agricultural Mechanization Engineers" National Research
University, 3rd stage "Accounting and auditing" direction, Uzbekistan
AB O U T ART I CL E
Key words:
Catalyst function, agent, ESG
reporting, investors, competitive advantage.
Received:
01.06.2024
Accepted
: 06.06.2024
Published
: 11.06.2024
Abstract:
Internal audit plays an important role in
ensuring a sustainable economy by providing
independent and objective assurance of the
organization's management, risk management
and control processes. This article explores the
importance of internal auditing in ensuring
sustainability in organizations, focusing on its role
in identifying and addressing environmental,
social and governance (ESG) risks. By assessing
risks, assessing compliance with regulations and
standards, and recommending improvements to
sustainability practices, internal audit helps
organizations reduce risk, improve their
reputation, and create long-term value. The article
discusses the challenges and opportunities faced
by internal audit in achieving sustainability goals,
highlighting the need to collaborate with other
functions and stakeholders to achieve significant
impact. Overall, internal auditing is a key enabler
of sustainable economic growth by promoting
transparency, accountability and responsible
business practices.
INTRODUCTION
In today's global landscape, the concept of sustainability has emerged as a key focus
for businesses and economies. A sustainable economy aims to balance economic growth, social
development and environmental responsibility by ensuring that current needs are met without
compromising the ability of future generations to meet their own needs. In this context, the role of
internal audit in promoting and protecting sustainability efforts is becoming increasingly important.
Internal audit functions within organizations are tasked with providing independent and objective
VOLUME04 ISSUE06
https://doi.org/10.55640/eijmrms-04-06-04
Pages: 23-26
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
AND MANAGEMENT STUDIES
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assurance, risk assessment, internal control assessment, and offering consulting services. These
functions are integral to ensuring the integrity of operations, effective risk management and compliance
with regulations and standards. When it comes to sustainability, internal auditing plays a multifaceted
role beyond traditional financial auditing. One of internal audit's main contributions to sustainability is
its ability to assess and mitigate risks associated with environmental, social and governance (ESG)
factors. Through a thorough risk assessment, internal auditors can identify weaknesses and gaps in
sustainability practices such as supply chain management, carbon footprint, social responsibility
initiatives, and ethical behavior. This proactive approach helps organizations address sustainability
issues before they become critical issues.
Main Part
In addition, internal audit acts as a catalyst for integrating sustainability issues into strategic decision-
making processes. By assessing the alignment of business strategies with sustainable development
goals, internal auditors provide valuable insights to management and board members. This includes
assessing the impact of sustainability initiatives on long-term value creation, stakeholder relations,
brand reputation and operational performance. Internal audit is involved in monitoring and ensuring
compliance with sustainability regulations, industry standards and reporting systems. also plays an
important role. As the focus on ESG reporting and transparency increases, internal auditors are helping
organizations navigate complex compliance requirements, verify the accuracy of sustainability
information, and identify areas for improvement in data collection and reporting processes. In addition,
internal audit works as a change agent in organizations, helping to continuously improve sustainability
practices. By conducting sustainability performance audits, internal auditors promote accountability,
encourage innovation, and foster a culture of responsible business conduct. This includes assessing the
effectiveness of sustainability management systems, evaluating the integration of ESG considerations
into business processes, and recommending improvements to sustainability strategies.
The absence of an internal audit function in organizations can have a significant impact on efforts to
achieve and maintain a sustainable economy. Internal audit plays a critical role in providing
independent assurance, assessing risk management practices, monitoring compliance, and encouraging
responsible business behavior. Without this oversight and accountability mechanism, a number of
challenges and deficiencies can arise that hinder sustainable development initiatives and potentially
threaten long-term economic, social, and environmental well-being.
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
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Lack of risk assessment and mitigation: Internal audit plays an important role in comprehensive risk
assessment, including those related to environmental, social and governance (ESG) factors. Without
internal audit, organizations may struggle to effectively identify and address sustainability risks. This
can lead to increased vulnerability to environmental degradation, social conflict, regulatory non-
compliance and reputational damage.
Limited transparency and accountability: Internal audit enhances transparency by independently
evaluating and verifying the accuracy of financial and non-financial information, including
sustainability disclosures. In the absence of internal auditing, there may be a lack of transparency
regarding sustainability performance, impact and progress. This can undermine stakeholder trust,
investor confidence and the credibility of sustainability reporting.
Compliance and regulatory risks: Internal audit helps organizations navigate complex sustainability-
related regulatory requirements, industry standards and reporting systems. Without internal audit
controls, there is a high risk of non-compliance with environmental regulations, labor standards, human
rights principles and other mandates related to sustainability. This can lead to legal obligations, fines,
penalties and damage to corporate reputation.
Ineffective management and control: Internal audit plays an important role in strengthening corporate
governance, risk management and internal control. Without internal audit functions, there may be gaps
in governance structures, inadequate oversight of sustainability practices, and a lack of accountability
mechanisms. This can lead to inefficient decision-making, mismanagement of resources, and
suboptimal allocation of capital for sustainable development initiatives.
Missed opportunities for improvement: Internal audit serves as a catalyst for continuous improvement
by identifying areas for improvement, recommending best practices, and encouraging organizational
learning. Without internal audit, organizations may miss opportunities to optimize sustainability
performance, innovate sustainable practices, and adapt to changing stakeholder expectations. This can
lead to stagnant progress, missed opportunities for competitive advantage, and reduced resilience in a
rapidly changing business environment.
CONCLUSION
In short, the role of internal audit is indispensable in ensuring a stable economy. Internal auditors serve
as guardians of an organization's integrity, stability, and long-term viability. By proactively addressing
sustainability risks, promoting responsible business practices and supporting strategic alignment with
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
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the Sustainable Development Goals, internal audit makes a significant contribution to creating a more
resilient and sustainable economy for current and future generations.
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