Internal audit plays a vital role in keeping organizations on track. With internal audit management being essential in providing the “checks and balances”. It ensure the governance process business, risk management, and compliance. Internal audits ensure that internal controls are working properly and, therefore, help your organization navigate evolving risks.
What does internal audit mean?
Internal audit is how the companies evaluate their internal controls, including the governance and accounting processes. It has increased very significantly in recent years as Sarbanes-Oxley tightened reporting requirements on financial controls. Internal audits ensure that your certain processes comply with relevant legal and regulatory requirements and support accurate data collection and reporting, whether financial, ESG, or other data.
Therefore, they can also help your managers and senior managers. Internal audits are the first opportunity to identify problems before moving on to external audits and to improve operational efficiency by spotting potential improvements.
What is the purpose of an internal audit?
By providing the first line of defense against the poor processes and controls, an internal audit is your primary tactic in the fight against non-compliance. However, the benefits of a robust internal audit management process go beyond simple checkbox compliance.
Good internal audit management can also cleverly monitor and improve corporate culture, which is recognized as crucial for a compliant organization. As the Financial Reporting Council, a UK regulator, recently pointed out, the internal audit process
“has an important role to play in providing assurance and informing the board of directors.” that the company culture is healthy.”
Governance and culture are intrinsically linked, and FRC believes that good governance is
“Consistent with a positive corporate culture”.
And there are other advantages. By aligning your internal audit with your broader business strategy, you’ll turn compliance into an opportunity to use the process to improve your business.
In this way, managing internal audits improves DEI performance, organizational agility, and other business requirements. Internal audit can play a central role in realizing your ESG strategy. It underpins an integrated risk management strategy by providing protection against threats such as fraud and cyberattacks. And by leveraging some simple best practices, the internal a team can transform from compliance practitioner to business leader.
While external audits can only examine some specific regulatory risks and controls, internal audits can be more extensive. In an ideal world, your internal auditor would be a mix of auditor and consultant, examining your processes and recommending improvements that will help your organization grow and thrive.
EXPLORING BEST PRACTICE INTERNAL AUDIT MANAGEMENT PROCESSES
To achieve this goal, you need to implement some best practices in internal audit management. We have compiled seven of the best internal audit management strategies to help you.
1) Failure to plan is planning failure
Effective preparation for an internal audit is essential – it will help gain support for the process, ensure timelines are met, and facilitate the release of all data you need to conduct an assessment.
Explain the process to the team you are auditing. Don’t forget to communicate the benefits of the audit; it’s a process that is designed to benefit them, not just to satisfy an administrative need. Talk about the increased efficiency, better processes, and the ability to try out external audits.
Form a core team, communicate test coverage, and share details about the data you need and the systems you want to access. Performing a risk assessment first can help you on this last point.
These will help reassure those you are auditing and ensure that you have everything needed to complete the audit.
2) Interact with the company you are auditing
We talked about it in point one, but it cannot be overemphasized. Coming in once a year without warning, auditing a division, and then disappearing for another 12 months fails to build the necessary bridge between the internal audit and the rest of the company.
Communicate regularly, explain your goals to resonate with the team being assessed, and share your findings, next steps, and results to ensure everyone involved feels part of the team. Internal review process.
3) Identify the main controls
Your risk assessment will allow you to identify significant risks and the controls to manage them. Whether it’s testing your organization’s Zero Trust Architecture or another IT risk management strategy, measuring your sustainability practices, testing financial controls – or something specific may be different for your organization, identifying key risks and the measures to control them is the next important step in the internal audit management process.
4) Check out these controls
This can be called the “field” phase. While in the business, you will gather essential information about controls, measurements, and corrective actions. Document your findings in writing to create a compliance audit process. And continue to communicate with your “clients,” so everyone is aware of your goals and actions.
5) Actively reporting
The report is the result of the internal process. Internal audit management best practices make compiling this report an integral part of your fieldwork. Don’t wait until you’ve finished collecting your data to start writing a report; you may forget or omit important details or nuances that make up a well-rounded report.
You should also share some of your findings as you write them; this gives the audited team and other internal stakeholders an overview of the contents of the final report and can avoid unpleasant surprises.
6) Take a more flexible approach
Managing internal audits has traditionally been a rigid process with fixed deadlines and parameters. But introducing an element of flexibility has proven to engage all stakeholders in a way that an annual audit cannot.
Position the internal audit management team as business partners acting as advisors to help business teams continually improve their risk management processes. This will help you gain the respect and support of the team you are evaluating and will show you that you are all working towards the same goal.
7) Harness the Benefits of the Internal Audit Management Software
Internal audit management can be very streamlined and upgraded using internal audit management software. If you want the audit process to be an integral part of your business strategy, then implementing a software-based approach can provide huge benefits.
Automated workflows accelerate the internal audit process while minimizing the risk of human error or omission. The result is “out of the box,” going beyond data to get insights that inform C-suite decision-making.
And the internal audit management software is constantly improving. Although the first generation of automation greatly enhanced internal audit, it had limitations that sometimes introduced new challenges, such as the emergence of “dark data” that could not be clearly analyzed or shared. Today’s intuitive audit management software overcomes these problems, allowing internal audit teams to access and query 100% of their data.