What are some of the factors to consider when conducting an internal audit?
Auditing is a management tool that can be used to evaluate and monitor the internal performance and compliance of your company with regulations and standards. An audit can also be used to determine the overall effectiveness of an existing system within your company. Show
How do you incorporate compliance auditing best practices to help maximize compliance, efficiency, and value of your audit? Here are five critical factors for value-added audits. 1. Goal Aligned with Business StrategyThere are many reasons why companies conduct audits:
It is vital to define and understand the goal of your compliance audit program before beginning the audit process. Establishing goals enables recognition of broader issues and can lead to long-term preventive programs. Not establishing a clear, concise goal can lead to a waste of resources. Audit goals and objectives should be nested within the company business goals, key performance objectives, and values. An example of a goal might be to effectively measure environmental compliance while maintaining a reasonable return on investment. Once the goal is established, it is important to communicate it across all functions of the organization to get company-wide support. Performance measurements should also be communicated and widely understood. 2. Management Buy-inThe audit program must have upper management support to be successful. Management must exhibit top-down expectations for program excellence, view audits as a tool to drive continuous improvement, and work to imbed audits within other improvement processes. Equally important, management must not use audit results to take punitive action against any person or department. 3. Documented Audit Program Systematically AppliedDescribe and document the audit process for consistent, efficient, effective, and reliable application. Audit procedures should be tailored to the specific facility/operation being audited. A documented program will include the following:
Training should be done throughout the entire organization, across all levels: Consider having auditor training conducted by an outside source to teach people how to decide what to audit and follow a trail. It can also work well to train internal auditors by having them audit alongside an experienced 3rd party.
4. Robust Corrective Action ProgramAs mentioned above, corrective actions are a must. If there is no commitment to correction, there is no reason to audit. A robust root cause analysis is essential. This should be a formal, yet flexible, approach. There should be no band-aids. Mistake-proof corrections and include metrics where possible. In the drum example given above, a more robust corrective action program would look at the root cause: Why was the drum mislabeled? Did the person know to label it? If so, why didn’t they do it? The correction itself is key to the success of the audit program. Establish the expected timeframe for correction (including addressing preventive action). Establish an escalation process for delayed corrections. Corrective actions should be reviewed regularly by upper management using the existing operations review process. There must also be a process for verification that the correction has been made; the next audit cycle may not be sufficient. Note also that addressing opportunities for improvement, not just non-compliance findings, may increase the return on investment associated with conducting an audit. 5. Sharing of Findings and Best PracticesAudit results should be communicated to increase awareness and minimize repeat findings. Even if conducted under privilege, best practices and corrections can and should still be shared. Celebrate the positives and creative solutions. Stress the value of the audit program, always providing metrics and cost avoidance examples when possible. Inventory best practices and share/transfer them as part of audit program results. Use best-in-class facilities as models and “problem sites” for improvement planning and training. An audit can provide much additional value and return on organization if it is planned and managed effectively. This includes doing the following: What things should we consider when doing an internal audit?Establish criteria of the audit. Relevant policies.. Processes and standard operating proceudures.. Performance objectives and KPIs.. Statutory and other relevant regulatory requirements.. Management system requirements (e.g. other ISO standards). Risks and opportunities as determined by the auditee.. Internal codes of conduct.. What are the 5 C's of internal audit?What Are the 5 C's of Internal Audit? Internal audit reports often outline the criteria, condition, cause, consequence, and corrective action.
What factors should be considered while preparing an audit procedure?These components commonly include the following:. Extent of audit plan's risk assessment procedures.. The nature of all procedures involved in the plan.. The timeframe for which the plan completes.. Nature of tests of controls.. Nature of substantive procedures.. Time frame for test of controls.. What are 3 critical success factors in the internal audit function?Accordingly, critical success factors of the internal audit performance consist of four factors namely senior management support, organization's culture and acceptance, auditor' skill and competencies and completeness of operating and information systems (Usana, 2009).
|