Audit firms are under increased analysis. Up to 50 percent of audits had noteworthy insufficiencies linked to the internal controls.
Companies have amended filings to report previously undisclosed material weaknesses. In addition, there are actions taken in contradiction of individual executives based exclusively on internal controls.
One needs a sound strategy and process for documenting and testing internal controls.
Internal auditors make several common mistakes.
1 – ADD VALUE
Many auditors cannot see the forest for the trees. They look for the easy solution. They do not analyse the actual root cause for the entire problem. How many times have you started auditing an area and finding issues management already knew about? Did that work add value? Would not it make more sense to collaborate with management to ensure all of your invested time and effort are adding value?
Make sure you do not spend valuable time micromanaging the process.
It is not vital to spend all your time in micromanagement process.
Adopt an effectual workflow and stick to it.
2 – PROPER PLANNING
Engagement planning is an essential part of audit.
The auditor should have a solid understanding of the process and the planned procedures. If the auditee knows the control is not effective, then the auditor should not be performing audit work.
As an alternative, a consulting engagement process should take place to help management get to the root cause. Do not tell them what they know, help them fix it.
Outlining an overt path from the beginning will ensure that your time is spent in the right way. The aim is to provide a consulting engagement to help senior management find the root of the problem.
3 – KEEP THE BIG PICTURE IN MIND
Increase the efficiency and effectiveness of your documentation and reporting to the audit committee.
Create reports and dashboards that automatically update. This will help you concentrate on root cause analysis.
4 – FEAR ABOUT SCOPE CREEP
If you have done proper planning, this is a lot easier, but it can still happen.
Auditors will often flush out some rabbits.
Many of those rabbits, we suspected we would find. Nevertheless, what happens when we flush out a big rabbit and it was not on our plan?
When something unexpected turns up, how will you handle it?
Have a plan in place before a surprise occurs, so you and your team will know how to resolve the situation efficiently and effectively.
5 – ELIMINATE STRESS OF MASSIVE AUDIT REPORTS
Nobody enjoys reading audit reports.
So, why would you write War and Peace?
Reports from the best audit departments start with an executive dashboard that gives a full overview in a single page.
No executive has time to read a report with the length of a novel.
Spend time working on a real-time, executive-level dashboard that features key metrics and processes.
Increase visibility across your association and make your reports easier to manage.
At a time when your controls and process are under pressure, be sure to avoid these top internal audit mistakes.