Internal Audit Framework - Attention Points

Every organization knows that an audit can be a stressful and costly process. An audit can often find issues with your accounting, financial or operational procedures that need to be remedied. This can be a difficult and time-consuming process. For several reasons, organizations can struggle with closing audit findings efficiently and effectively.?

A solid auditing framework is essential for a focused and efficient approach. A good understanding of the framework by all parties involved is key to proper utilization of the framework.?

Depending on where you are in the organization, there are several attention points that, when performed well, can improve the focus and efficiency of the audit framework in place. The Board and Audit Committee, the Chief Audit Executive, the Auditor, and the Auditee all play a role in this framework. Please find below a few attention points for both the Auditor and the auditee.

Framework requirements

The Internal Audit Framework details the purpose, objectives and deliverables of Internal Audit and explains the methodology and standards used to achieve independent assurance outcomes.

The auditee should understand how Internal Audit fits the Risk and Control Framework. A proper understanding of the roles and responsibilities that result from the three lines of defence model makes discussions on who is doing what regarding an audit finding follow-up more efficient and effective.

The Auditor should understand the internal audit charter's mandates and provisions and how they affect planning, fieldwork, reporting, remediation assurance, and quality assurance evidence.?

Understanding information requirements and business trends

Information requirements relate to the information needed to support a business or other activities of a business. A business trend is a general change in how a company develops. An example of a business trend could be corporate downsizing, corporate consolidation or outsourcing. Having insight into the information requirements and business trends dictates the direction activities and (audit) projects should take.?

For Audit-related information, the auditiee monitors open outstanding recommendations, including responsible parties and due dates. Based on the information and business trends, the right action could be taken when the actuals are not aligned with expectations.

For the Auditor, it is vital that a clear understanding of the type of information and level of detail the CAE expects regarding monitoring the results of engagements and remediation efforts is obtained and correctly processed to help the remediation process forward.

Budget and Staffing

Budgeting is the basis for all business success. A well-communicated budget helps everyone understand the priorities of the business. Creating a budget provides opportunities to involve staff, resulting in them sharing the organization's vision; and direction. Even if the funding is insufficient at first sight, there are many ways to make the budget work by looking at alternatives.

For the auditee, in the event of limited staff availability, hiring or outsourcing arrangements should be made to support the remediation of issues efficiently and effectively. In addition, the Auditor should also keep abreast of practices regarding:

• Communication and relationship development
• Report writing
• Root cause analyses
• Project management

Internal audit performance

Internal Audit performance is defined as how an internal audit department fulfills its duties and executes its required mandate. It refers to the department's output's effectiveness, quality, and efficiency.?

To support the performance of the Internal Audit department, the Auditor could keep abreast of emerging risks, issues, and practices by participating in professional outreach activities (e.g. attending complimentary IIA webinars and member meetings). Implementing the latest insights will keep the Internal Audit department's performance in line with peers and other (supporting) departments.

Benchmarking

Benchmarking measures the performance of an internal audit department's services or functions against those of another department considered to be the best in the industry, aka "best in class." The point of benchmarking is to identify internal opportunities for improvement. When a department considers itself best in class, it says they have nothing to improve. The auditee could Request in-depth reports on benchmark work completed by CAEs or compliance officers to determine possible steps to improve the business.?

Final Thoughts

Independent and fresh eyes could help an organization take a comprehensive look at the operations and provide tailored recommendations to help you reach your goals.?

J. Denissen Chartered Professional Accountant offers audit issue remediation and training services that are the perfect solution for businesses and organizations who want to educate their staff and get back on track quickly and efficiently. We have the experience and expertise to help you navigate the audit follow-up process, identify and remedy any issues, train staff and get your business or organization back on track in no time.