Internal Audit

Internal Audit Services: What Good Looks Like for Growing Companies

Growing companies often delay building an internal audit function until regulators or the board force the issue. By then, the gaps are significant. Here is how to get ahead of the problem.

By Eric Kennedy · Sun Mar 01 2026 · 6 min read

The Internal Audit Gap

For many growing companies—particularly those in the $50 million to $2 billion revenue range—internal audit is either nonexistent or underbuilt. The function gets deferred because the company is focused on growth, and audit feels like overhead.

This is a strategic mistake. Internal audit is not just about compliance. A well-designed function provides independent assurance over the controls and processes that protect the business as it scales.

When to Build the Function

There is no universal revenue threshold that triggers the need for internal audit. But there are clear signals:

• The board or audit committee is asking for independent assurance
• The company is preparing for an IPO, acquisition, or significant financing event
• Regulatory requirements are increasing
• The organization has experienced control failures, fraud, or significant operational surprises
• Management is making decisions without reliable data about operational risks

If any of these apply, the company has already waited too long.

What a Good Internal Audit Function Looks Like

Risk-Based Planning

The audit plan should be driven by the organization's risk profile, not by a checklist of processes to audit. This means internal audit needs to understand the business strategy, the key risks, and where the controls are weakest.

A risk-based plan focuses audit resources on the areas that matter most. It is flexible enough to shift when new risks emerge.

Independence with Access

Internal audit must be independent—reporting to the audit committee, not to the CFO or controller. But independence does not mean isolation. The best internal audit functions have strong relationships with management and deep access to operations.

This balance is critical. Without independence, audit findings get filtered or suppressed. Without access, the function cannot understand the business well enough to provide meaningful assurance.

Practical Recommendations

Audit findings should be actionable. Every observation should include a clear recommendation that management can implement. Findings that describe problems without offering solutions are not useful.

The best internal audit teams also prioritize their findings. Not every issue is equally important. Helping management distinguish between critical control gaps and minor process improvements builds credibility and drives action.

Talent That Understands the Business

Internal auditors need more than technical skills. They need to understand the industry, the business model, and the operational realities of the company. This is especially important in mid-market companies where the audit function is small and every team member needs to add value across a wide range of topics.

Co-Sourcing vs. In-House

Many growing companies use a co-sourced model: a small internal team supplemented by external specialists. This approach provides flexibility, access to specialized skills, and scalability without the cost of a large permanent team.

The key is to maintain internal ownership of the function. The Chief Audit Executive or equivalent should be an employee who understands the organization and has relationships with the board and senior management. External resources supplement the team but do not replace internal leadership.

Building for the Future

The internal audit function should evolve as the company grows. What works at $200 million in revenue will not work at $1 billion. Build the function with scalability in mind—invest in methodology, technology, and talent development from the start.

Companies that build internal audit proactively, rather than reactively, avoid the painful catch-up that comes when the board, regulators, or investors demand it.