How to get the best out of your Internal Audit Function or Department

Most organizations are faced with a serious challenge on how to handle the Internal Audit Function or Internal Audit Department. In most instances where a company faces financial crisis and revenue challenges, the first option is to reduce the Internal Audit Function's head count. The Auditing Department's role cannot be overemphasized.

What is the purpose of having an Internal Auditing Department?

This question has been asked time and again. Some organizations view the internal audit function as a tool to make sure that the organization is as effective and efficient as possible. Other organizations view the assessment as an expensive, time-consuming activity. A third group of organizations ask, "What is internal audit function?"

According to The Institute of Internal Auditor's (IIA's) definition of internal auditing, the internal audit function should provide independent, thorough, timely, and objective results of quantitative and qualitative testing to senior management. Internal auditing assists public and private organizations to meet overall goals by establishing a systematic approach to assess the effectiveness of risk management, control, and governance processes.

An independent internal audit function is unbiased and holds a neutral position within an organization. It has the ability to define the scope of internal audits, the authority to obtain information and resources, and has an appropriate reporting structure to senior management. The members of the internal audit team are not testing their own work or that of persons they report to. Any actual or potential conflicts of interest that hinder an honest and unbiased assessment must be disclosed.

What is the problem with this definition and why is it not always achieved?

On paper, the Internal Audit department should be able to assist an organization grow and plays a vital role in the achievement of the organization's objectives. But we have a problem with this picture.

• The first problem is usually a lack of skill and understanding by most internal auditors.
• The second problem is a lack of urgency and delays in submitting findings.
• The third problem is a lack of independence. It's about the blurred lines that surfaces when we examine what is actual objectivity and perceived objectivity.

What is the solution to these problems?

The solution is simple; it is a term that has been around but never tested by business owners. This term is CO-SOURCING. This means using external skills and knowledge to boost your internal audit function. If used properly, the knowledge brought in by external experts from within or without the organization can significantly enrich your audit department.

The other solution is to outsource your Internal Audit Function; this comes at a cost but the benefit always outweighs the costs of doing so.

Final thoughts

The purpose of an internal audit function is to act as a tool to make sure that an organization is as effective and efficient as possible. The internal audit standards shape an independent, efficient, and therefore effective, audit function. A combination of co-sourcing as well as out-sourcing techniques can be used to improve the quality of services rendered by the Internal Audit Function.