Internal Audit are the very back bone of an organization’s policy center. It might not be as important as an external audit, but it helps an organization stay in sync with the required policies and guidelines, and helps ensure everything is on track internally. Nevertheless, depending on the available bandwidth, organizations can perform internal audits through their own employees, or the entire procedure can be outsourced as well. It all depends on how well an organization wants to organize its internal audit procedures.
If your organization is performing its internal audits internally, then the following steps can be followed to ensure it is a long term success
1. Look for areas which needs to be audited
Look for areas which need to be audited: In some of the cases, it won’t be necessary to perform internal audits. In such scenarios, you need to identify the areas and processes which are governed by the regulatory guidelines. Processes like operational management, call centers, manufacturing processes, accounting processes, etc, can come under this purview. In each of these processes, chances are you would need to conduct an internal audit to ensure the processes are running as per the required norms and guidelines.
2. Determine the frequency of audits
Determine the frequency of the audits: Internal audit frequencies can be daily, weekly, quarterly, half yearly and even annually. However, the technicality of the process and the regulatory requirements will determine the frequency of the audits. For example, a manufacturing unit might need daily audits, while an HR function might suffice with an annual audit.
3. Work as per an audit calender
Work as per an audit calendar: An audit calendar is a structured and systematic way of ensuring the process gets completed on time. Audits should be synced into the corporate objectives, so that one can maintain consistency and regularity all around the year during the scheduled audit periods.
4. Schedule regular alerts for departments to stay up to date
Schedule regular alerts for departments to stay up to date: Departmental dates need to be announced, so that each department can understand when their audit results are due. In other words, if your dates are decided, you need to set up reminders for each process specialist to ensure no audits are missed during the working times.
5. Preparation is the key
Preparation is the key: When one talks about audits, it’s important to adhere to the guidelines laid down by the auditing firms. If the policies and procedures are to be reviewed, one should have the yardsticks ready, in order to be able to measure the success of the achievements. If the auditor himself/herself is not aware of the policies and procedures, the purpose of performing an internal audit is defeated.
6. Interview the daily operational users
Interview the daily operational users: By using interviews as an effective tool for gauging the process guidelines, an auditor can understand what procedures are being followed versus the procedures which were initially laid down by the management. If there are any disconnects within the processes, chances are the process is not functioning as it should be.
7. Documentation is important
Documentation is important: Irrespective of any gaps which might have been noticed, the findings will need to be documented in a safe and secure location. If any gaps have been noticed, they need to be worked on; if no gaps are noticed, the health of the process along with the compliance percentage should be reported to the higher management.
8. Report your findings
Report your findings: Once the documents are ready, the findings should be reported, especially when gaps have been noticed in the procedures. If there are findings which need immediate attention, they should be flagged for immediate actions.
9. Create an action plan to plug in gaps
Create an action plan to plug in gaps: Once the findings have been reported, the process owners need to create the appropriate action plans to plug in the gaps. This way, there is a good possibility of being able to plug in the required gaps, so that the process remains 100% compliant to the written policies and procedures.
10. Schedule a mock audit
Schedule a mock audit: By scheduling another round of mock audits, one can gauge the success and how well the process is functioning post the audit. If the process health is 100%, one can rest assured the audits worked. If there are more gaps, then the process control model needs to be revised for best results.