Auditing is exceptionally essential for any company, be it big or small. Internal and external audits are designed such that they allow us to pursue as well as achieve various corporate needs. The operations and workflow of the business processes require a mixture of different forms of internal control which ease out the supervision and monitoring, identify and stop irregular transitions, analyze ongoing performances, maintain satisfactory performances, and enhance productivity.
Internal audits are a necessity
An internal audit can be performed through the utilization of the internal resources or outsourced to a reputed third party vendor. One of the major purposes of internal audit finance is to gauge out the risk of material misstatement in the company’s financial reports and produce reliable documents, the other is to play a vital role in fraud prevention. Let us have a look at the consistent process followed by professional internal auditors for a fruitful outcome.
Identification and selection
First and foremost, there is adequate planning required to figure out and know what to audit and when. If focusing on internal audit finance, find out the processes that need to be audited. Once you acquire the information, understanding the scope and objectives of the audit process can aid in creating a proper audit schedule. All internal audits should be conducted on the basis of risks of the processes and the higher the risk in a specific area of the business the more should be the frequency of auditing that business area. A proper risk assessment helps develop an effective audit plan.
Planning the audit process
Once the processes have been identified, the next step is to create a plan from the relevant background information. The detailed planning includes scheduling the timings, or fieldwork and report distribution, and informing the people in charge of the schedule so that they can have the necessary documentation and records available for review and audit. Such planning stages are also crucial for the business as it will be easier to source a qualified team from the internal resources. This phase also involves etching the plan and checking if it is in compliance with official policies and protocols.
Execution of the plan
This is the actual conduction of the process which may involve various processes like documentation review, interviewing of the personnel, and observation of the process being reviewed. On the basis of the scope and understanding of the auditors, the audit follows different chronologies as per a variety of methods or amalgamates a few methodologies to create a suitable workflow. The internal auditor sights and examines the sufficient hard copies or electronic records for verification, looking at the evidence of compliance with the management system procedures, as well as effective implementation of process and internal control.
Reporting and follow-up
The findings from the conducting of the audit process are to be recorded with precision, along with the listing of all the evidence sighted by record number or record data. The main aim of the document, the data found by auditing, is to identify the gaps in compliance and recognize the opportunities to fix the deficit and improve the overall process. The findings are run by the auditee to keep them in the loop and clear any doubts or queries from either side. These reports are composed in a manner that the suggestions and outcomes are easy to read for the team as well as the management board. They are reviewed and approved by top management and the summarized conclusions and specific considerations are followed up by a set of subsequent audits.
Wrapping up
Adopting a set and consistent audit process proves to be beneficial for a plethora of reasons. There is a standardized process ensuring that the internal audit finance does not go awry and there is effective communication of audit expectations, identify the mistakes, automate repetitive tasks, and mitigate the potential risks. The processes involved in internal audits are a collaborative effort and bore fruits only by coherent operations at every stage. Following a designated audit process safeguards one’s business against audit error. These pointers make for a complete checklist for auditing the operational, technical, financial, and other such risks with efficiency.
