Glossary · Reading the business
Internal audit
In short
An independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps a business accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
What it means in a deal
While a small business you're buying might not have a formal internal audit department, the concept of internal controls is crucial. During due diligence, you'll effectively perform your own "internal audit" by scrutinizing financial records and operational processes to identify risks, inefficiencies, and potential fraud. Pay close attention to how the seller manages cash and inventory.
Related terms
Common questions about Internal audit
- What documentation demonstrates a lender's adherence to prudent lending standards during an SBA audit?
- How does the SBA typically review a lender's loan file in the context of a secondary market audit?
- What if a lender's internal loan review discovers a potential eligibility issue post-closing?
- Can an SBA loan finance a partner buyout if we've only used an internal valuation?
- Can a lender accept contributed equity in the form of existing machinery valued by an internal appraisal?
- What are common reasons for significant delays in the SBA's *internal* review and authorization of a loan?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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