The success of a company depends not only on external factors but many internal factors. The internal factors can include the functioning of different departments, processes and checks employed in the day-to-day operations, the well-being of the staff, robust payroll system etc. In addition, an internal audit can ensure that the systems put in place are efficient and serve the company management's intended goals. Hence, it is vital to employ a robust internal audit structure in the company.
An internal audit is a proactive approach to accessing the company operations and internal controls employed and recommending solutions for the audit findings. The primary role of internal audit assignment is to give independent assurance on the effectiveness of the company's governance, risk management and other internal control procedures.
A robust internal audit structure in a company will ensure the business processes are sound and make the company competition ready in the industry. The following are some of the audit best practices that can provide a solid and resilient structure:
Clear reporting structure
The company's reporting structure and procedures should be evident to provide transparency to the internal audit team. Any discrepancies in the reporting process will negatively affect the communication and working of the internal audit team.
Develop Intra-company Relationships and Build Trust
Before the audit, the key stakeholders like the company CEO, CFO and audit committee should meet and set up the expectations for the audit and ensure they are aligned with each other. The company leaders should be consulted to know the current processes and their expectations in the next few years. The audit team should work in close tandem with the department leadership and the staff during the Internal Audit. The audit team should be transparent and rewrite all previous assumptions of company departments on audit. The audit services should be conducted as a joint effort with the stakeholders to improve the entire functioning instead of pointing fingers.
Business Strategy and Risk Assessment
The audit team should understand the business strategy of the entire business before conducting an audit. The audit team should study all the previous audit reports and findings and draft a risk assessment report accordingly. The audit conducted based on the risk assessment report can address all the pain points and report any results.
Positive Attitude and Commitment
The internal audit team must appreciate the company and different departments when they perform well, and processes are functioning, achieving the Audit Objectives. A positive attitude will increase the employee morale of the department. The audit team must be committed to the organization and support the growth instead of focusing on the negative aspects of the company.
Training Internal Audit Team
The internal audit team should be trained in conducting audits to conduct an effective audit program and meet required audit standards. The training provides a higher value-added opportunity for the company to ensure sound management systems. The internal audit training system must include specific checklists, ways to fill out respective audit records and the standard procedures that control the audit function. Modern technology should be adopted to centralize company documentation, facilitate collaboration amongst audit teams and stakeholders, and real-time status of the audit.
Concentrate on High-risk Operations
It is always a best practice to focus on the risker functions of the organization. Quality internal audits of such high-risk operations improve the company long-term, leading to effective business processes.
Adopting data analytics on the internal audit process can result in an effective audit. Data analytics provides enormous amounts of clean, structured data and provide necessary insights for the internal audit team. Data analytics further enables the auditors to extract the required information, identity, analyze patterns, and detect any discrepancies in the system.
Jaxa Chartered Accountants provide services to local and foreign companies operating in the UAE. Our services include Bookkeeping, accounting, auditing and payroll processing. In addition, our experts assist companies with setting up the internal audit process and help them conduct an internal audit. Please Contact Us for any assistance on the internal audit. We'd be happy to help!