If the time has come to give your department an internal audit, you may find the following tips and suggestions helpful. We’ve compiled them based on our own experiences and from advice provided by professionals in many different fields (examples include universities and service centers). If you’d like additional help with your own audit, don’t hesitate to get in touch with us.
1) Establish Clear Auditing Roles
* Department Manager: As the head of the department, your job is to define the strategies that guide your department’s day-to-day activities. It’s important for you to produce all available documentation governing your department’s policies and procedures. At the conclusion of the auditing process, you should receive a report that identifies key risks and issues. Responding to these points, as well as any recommendations provided by the auditors, is vital.
* Process Owner(s): Audits typically identify key processes for closer examination. Each process should have one or two owners who take responsibility for it. Owners need to be able to explain every aspect of the process. For example, in retail businesses, we typically identify cash handling as an important process. We would want to interview the individual(s) who collect, reconcile, and deposit the business’s cash.
2) Establish An Audit Liaison
* Audit Liaison: The liaison plays a coordinating role between the department and the audit team. A good liaison helps the audit team identify the key people they need to speak with and manages all information requests made by the team. The audit liaison is often charged with retrieving the information needed by the auditors and turning it over to them in a timely fashion. Establishing an audit liaison gives everyone a singular point of contact and makes it easy to track the requests made during the auditing process. Check out this internal audit from Barclay Simpson to get an idea of what is involved.
3) Familiarize Yourself With Auditing Procedures
* Audit Planning: It’s the auditors’ responsibility to define the objectives of the audit, the resources required, and the schedule to use. There will be an introductory meeting to give your department a broad overview of the process. This is the ideal time to speak up about any issues you have with the approach or timing of the audit.
* Assessing Internal Controls: This phase involves meeting with the process owners in your department to get a clear understanding of the rules and procedures that govern your work. Any and all documentation that can be provided to the audit team at this point will greatly speed along this part of the audit.
* Testing And Analysis: Auditors will run test transactions (or other activities) to verify that your department operates according to the procedures they have outlined. The audit team typically asks your department to provide a range of sample transactions and then produce details fully describing selected transactions.
* Reporting: This is the closing phase of the audit. The auditors’ task here is to present their results. The form of information presented can vary; audits may produce observations, recommendations, risk identification, and/or process improvement suggestions. The management team needs to provide written responses to the issues raised by the auditors.
4) Address Common Challenges
* Miscommunication: It’s helpful to ground your auditors in the internal language used within your department so that they can exchange information clearly with your team. If auditors use terminology that’s unfamiliar to you, ask for an explanation before you start gathering data.
* Scheduling: Get your schedule to the audit team as soon as possible. Identify potential constraints that need to be worked around. Keep in mind that there is rarely an ideal time for a departmental audit. The process will need to be scheduled with flexibility to accommodate all parties’ requirements. Once a schedule is established, do your best to stick with it.
* Disclosure: Be direct about the known strengths and weaknesses of your department when you speak with your auditors. You want them to concentrate on uncovering new information rather than discovering issues you’re already aware of.
* The Big Picture: Don’t be afraid to ask your auditors why they are looking at particular areas. The better you understand the audit team’s objectives, the more help you can provide and the faster you can complete the audit.