Private Equity Funds: Internal Audits

  • Former Federal Agents
  • 100 Years of Combined Experience
  • Investigations, Compliance & Defense
Chris Quick

Former Special
Agent (FBI & IRS)

Roger Bach

Former Special
Agent (DOJ-OIG & DEA)

Timothy Allen

Former Special Agent
(U.S. Secret Service & DOJ-OIG)

Ray Yuen

Former Special
Agent (FBI)

Michael S. Koslow

Former Special
Agent (DOD & OIG)

Internal audits are meant to assess a corporation’s internal controls. They offer a systematic and disciplined approach for assessing and improving risk management, governance, and control processes.

Private Equity (PE) firms need internal audit departments to ensure they adhere to industry standards and regulations. Handling internal audits in-house can prevent penalties associated with non-compliance. However, internal audits need to be independent and objective.

That is where internal audit professionals like Corporate Investigation Consulting come in. What’s more, internal audits can be triggered by regulators, law enforcement authorities, and other parties in unique cases like investigations. Medium to large corporations and PE firms need professionals like us to navigate such investigations.

Corporate Investigation Consulting can handle all internal audit matters involving medium to large corporations and PE firms nationwide. We understand the requirements and internal processes that corporations and PE firms must have. We can also defend abrupt internal audits that end up in lawsuits, hefty fines, among other negative consequences. Call our internal audit team now for a free, confidential consultation: 866-352-9324.

Tim Allen

Private Equity Funds Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)

Why PE Firms Need Internal Audits

Risk management: Regardless of the size of a corporation/PE firm or the industry in which the corporation/PE firm exists, it is crucial to be proactive about risk. Internal audits initiated within a corporation/PE firm are important for identifying any internal process errors or mistakes that have happened or could happen. The size of medium to large corporations and PE firms comes with notable risks. Internal controls can’t eliminate all risks.

Our internal audits are critical for safeguarding against staff risks, among other risks (i.e., cybersecurity threats and more) that would go unnoticed if audits are not done.

For compliance: Internal audits also ensure compliance. Medium to large corporations and PE firms in every industry are supposed to comply with certain state and federal laws. Non-compliance comes with consequences such as fines, lawsuits, and licensing problems.

Our internal auditors understand compliance laws across all industries and states nationwide. We can assess a corporation’s or PE firm’s internal controls and ascertain compliance. Whether it is a healthcare company interested in ensuring HIPPA compliance or a pharmaceutical multinational keen on complying with Medicare guidelines, Corporate Investigation Consulting is here to help.

To boost productivity: Since internal audits demand full transparency, the process keeps employees and management working optimally. Staff members who know their work is being tracked constantly have no option but to work as expected or beyond expectation.

Measure progress: Internal audits offer an accurate analysis of the progress being made by a corporation/PE firm. When a corporation/PE firm makes big decisions on business development, cost-cutting, hiring, etc., the best way to assess the effects of such decisions is through an internal audit process.

Our audits have helped many PE firms nationwide make informed decisions on many aspects from staffing to product/service development, budgeting, internal policies, and more.

Put our highly experienced team on your side
Roger Bach

Former Special Agent (OIG)

Timothy E. Allen

Former Senior Special Agent U.S. Secret Service

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Maura Kelley

Former Special Agent (FBI)

Ray Yuen

Former Supervisory Special Agent (FBI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Marquis D. Pickett

Special Agent U.S. Secret Service (ret.)

The Role of Internal Auditors

When it comes to auditing PE firms, internal audits have certain responsibilities. Whether audits are conducted by in-house employees or by professionals (consultants) like us, auditors must do the following:

  • Assess, analyze and monitor internal controls of a PE firm
  • Assess, analyze and monitor risks
  • Review a corporation’s or PE firm’s compliance with state and federal regulations
  • Offer solutions, recommendations, or opportunities for improvement based on the results or information found after conducting audits

Our Process

We begin the audit process by gathering information about a PE firm’s internal processes then use this information to identify areas of interest. We analyze such areas and identify errors and/or opportunities that need improvement. Our audits are done objectively in strict accordance with applicable data and privacy regulations.

In-house auditors with a personal connection to a PE firm are prone to offer biased results or focus on certain aspects only. Corporate Investigation Consulting offers an objective and fresh perspective important for assessing internal controls accurately.

Is it Time to Conduct an Internal Audit?

The importance of internal audits is clear from the above information. However, when should an internal audit be conducted? There are two main factors that warrant an audit in Private Equity firms.

First and foremost, internal audits should be part of a PE firm’s processes. Audits must be done systematically on a regular basis. The frequency of audits is determined mainly by the probability or potential severity of a risk. For instance, if a PE firm is at great risk of non-compliance related failures, more audits should be done. This includes periods after new legislation is passed or when a PE firm is about to be subjected to new guidelines.

Audits should also be done when there are pressing issues. Events that can trigger an audit depend on factors such as a PE firm’s line of business, scope of operations, risk, etc. The extent and nature of potential issues is also important. For instance, consumer complaints on product quality usually trigger an inquiry, and a product compliance officer may not ask for a rigorous audit. However, suppose the concerns are about adverse health effects suffered from using a corporation’s product, such an instance should warrant a comprehensive compliance audit into the internal processes that govern the sourcing and production of goods.

Negative Internal Audit Results. What to Do?

Private Equity firms are bound to have audit reports with many findings. Part of our job is to highlight serious issues and present solutions to a PE firm’s management or board. We also take the appropriate steps to fix internal audit problems.

While listed corporations must conduct audits as part of the compliance regulations, PE firms have less stringent audit compliance guidelines. Nevertheless, it’s prudent for them to hire audit professionals like us periodically to avoid common problems discussed above.

Corporate Investigation Consulting can handle audit problems ranging from compliance issues to investigations and legal suits. We have legal experts, former intelligence officers, prosecutors, private investigators, and other handy professionals needed to solve all problems arising from internal audits in PE firms.

We offer highly specialized services that enable us to investigate specific areas of operations at any frequency or depth. Call us at 866-352-9324, or contact us online for a free, confidential & non-obligatory consultation highlighting more of what we can do for your business.

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