The process of internal audit is divided into different sections and is planned for the internal audit, execution of the fieldwork, and internal audit reporting. Each step is completed by practicing different tasks in various steps. Now we will focus exclusively on the process and reporting of internal audit in specialized internal audit firms.
Process of Internal Audit
Notification
This is the initial step of the internal audit in which the auditor / chief auditor is needed to audit notification addressing to the higher management of the organization and process owner. The process owner is an official who is in charge of the module chosen for the audit activity. The notification involves the information like name of the module under audit, the name of the auditor assigned, the period of audit, tentative audit time, and resources needed from the company.
Resource Planning
Resource planning is the second step where the chief auditor is needed to assess the resources needed like the number of audit staff, support staff, technical assistance: computer, technical knowledge of expert (if needed), software, etc.
Open Meeting
Plan an opening meeting company’s organization and invite the process owner and all other related officials to participate in the meeting. The meeting’s agenda is usually based on the nature of the business and the role of the module and its officials in the smooth operations. Invite the process owner to give a presentation on his role, objectives of the module, activities performed to achieve the objectives, internal controls, documentation included in the process, approval, command and control authorities, financial powers of the officials monthly reporting, and management information flow, etc.
Understanding the Procedure and Policies
Get the procedures and policies of the company related to the particular module under the audit. Establish a clear understanding of our policies and procedures. In the absence of specific policies and procedures, consider adopting best business practices. Once you have a clear understanding of the policies and procedures, conduct a walkthrough test. This test will help ensure compliance with the procedures and allow you to assess any internal control weaknesses and inherent risks associated with the module under audit.
Execution
After familiarizing yourself with the company’s procedures, policies, and the transactional system of the module being audited, develop a self-assessment control questionnaire. This should include questions across several categories: general information, internal controls related to the module’s activities, accounting practices, and reporting. Now, circulate the questionnaire to the officials for their feedback assess the internal control risks at low, medium, or high levels, and create the audit procedures according to the resulting conclusion in the self-assessment questionnaire.
What are the Benefits of Internal Auditing?
Internal auditing is an impartial and objective activity that provides assurance and consulting services, aimed at enhancing the value and efficiency of an organization’s operations. The benefits of internal auditing offered by specialized internal audit firms are mentioned below.
Constant Improvement
Internal auditing provides a potent instrument for promoting continuous improvement. It offers valuable insights into boosting the procedure of the organization.
Compliance
Internal auditing serves as a safeguard to ensure adherence to relevant laws, regulations, and standards. This compliance verification helps reduce the risk of penalties and reputational harm associated with non-compliance.
Quality Auditing
Quality auditing ensures that an organization’s products or services conform to established quality standards. It examines quality assurance processes from product design to customer delivery, guaranteeing compliance with quality commitments.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.