Guiding principles for building internal audit success

03 November 2023 5 min. read
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In today’s rapidly evolving risks landscape, internal audit is a critical component of any organization’s risk management framework, ensuring a systematic and objective evaluation of operations, processes, controls, and threats. Experts from AIGC share twelve guiding principles for conducting a successful internal audit process.

The internal audit cycle is important for a number of reasons. It helps organizations identify and manage risks effectively, and down the line, it provides an independent and objective assessment of operations, a step which provides management and other key stakeholders assurance that the organization’s operations are effective, efficient, and comply with applicable laws, regulations, and policies.

Running a company-wide internal audit process is however easier said than done, with internal audit teams facing numerous challenges along their way including poor data quality, insufficient resources, business resistance, lack of capabilities, and more.

Guiding principles for building internal audit success

Expert tips to enhance internal audit success

To maximize the efficiency and effectiveness internal audit success, internal auditors need to address common challenges across the lifecycle and adopt best practices. Building on their years of experience in the field, experts from AIGC – a specialised risk consulting firm in Saudi Arabia and Jordan – outline twelve guiding principles.

Tip #1: Define Clear Objectives and Scope
One of the most critical steps in the internal audit process is defining clear objectives and scope of the audit engagement. This ensures that internal audit teams focus on the essential areas of the organization as well as avoid misunderstandings and conflicts that may arise during the audit process.

The internal auditor should ensure that the objectives and scope are aligned with the organization’s goals and risk management framework.

Tip #2: Build a Strong Internal Audit Team
Building a strong internal audit team is crucial to the success of the internal audit process. The team should have the necessary mix of skills, experience, and knowledge to conduct the audit effectively.

The team should also have a diverse background to provide different perspectives on the audit process, the team members should be trained and have access to the resources they need to perform their duties.

Tip #3: Develop a Risk-Based Approach
A risk-based approach is a systematic and objective method of identifying, assessing, and managing risks. It consists of identifying the potential risks and their impact on the organization’s objectives.

The internal auditor should develop a risk-based approach to ensure that the audit process focuses on the areas of the organization that have the highest risk and help to prioritize the audit activities and allocate resources effectively.

Tip #4: Utilize Technology and Automation
Leveraging the power of technology can help internal auditors boost their productivity and effectiveness. The auditor should leverage technology and automation to collect and analyze data, documents, and other evidence to reduce the risk of errors and increase the accuracy and consistency of the audit process.

Tip #5: Enhance Communication and Collaboration
Communication and collaboration are essential for the success of the internal audit process. The auditor should establish clear lines of communication with management and other stakeholders and also work collaboratively with other departments and teams to ensure that the audit process is transparent while being effective and efficient.

Tip #6: Conduct Continuous Monitoring and Auditing
Continuous monitoring and auditing can help to identify potential issues and risks before they have a major impact on operations. It involves monitoring the organization’s controls regularly to ensure that they are functioning as intended.

The internal audit team should conduct continuous monitoring and auditing to ensure that the organization’s operations are compliant with regulations, laws, and policies.

Tip #7: Focus on Employee Development and Training
The internal auditor should focus on developing and training employees to ensure that they have the necessary skills and knowledge to perform their duties. The auditor should also provide feedback and coaching to employees to help them improve their performance.

Tip #8: Emphasize Data Analytics and Visualization
The internal auditor should emphasize the use of data analytics and visualization to collect and analyze data, documents, and other evidence. It can also help the auditor identify patterns and trends that may indicate potential issues or risks.

Further reading: Data analytics to become a game changer for internal audit.

Tip #9: Incorporate Feedback and Improvement Initiatives
Improving the internal audit process’s effectiveness and efficiency continually is an absolute must. The internal auditor should seek feedback from management and other stakeholders in order to identify areas for improvement and start initiatives to address the identified areas for improvement.

Tip #10: Establish a Formal Quality Assurance Program
The quality assurance program’s main job is to monitor the process to ensure that it meets the organization’s objectives and standards. Establishing this program allows every auditor to be consistent and meet the client’s expectations.

Tip #11: Maintain Independence and Objectivity
The very core of what internal audit should live and breathe – the practice and process should be fully independent and objective. Upholding this principle ensures the auditor’s integrity and credibility as well as makes the process free from bias or influence.

Tip #12: Be Proactive in Addressing Emerging Risks
There’s always something new happening, the auditor should stay up-to-date on the emerging risks and trends in the industry and the organization to prevent potential issues and risks before they become uncontrollable.