Internal Audit – A Strategic Advantage to your Organization!
In today’s dynamic business environment, Internal Audit (IA) plays a crucial role in ensuring organizational success. By systematically evaluating and improving the effectiveness of risk management, control, and governance processes, IA provides invaluable insights that help organizations achieve their objectives.
Below I will highlight some of the main benefits that I have seen in my experience working with IA teams including how they enhance operational efficiency and foster a culture of continuous improvement. Due to the inherent nature of audit risk IA is not meant to solve all of your problems or make everything easier. In my experience for a successful internal audit program, strategic direction from the top and independent oversight of the Audit Committee, a clear cut internal audit charter laying out the role it is playing in the organization and align priorities effectively, are all crucial.
Internal Voice to Management
Many times, organizations that have a dedicated internal audit function can have yearly discussions that offer a realistic view of where the organization sits in terms of maturity and operational expectations vs outcomes. These discussions can be based on target upcoming assessments, goals set by management, questions aimed at understanding risks that exist within specific processes or many other topics that may arise during the year.
Having these discussions prior to signing up for an assessment allows the organization to understand where there are areas of opportunity for improvement in terms of addressing risk, creating reliable evidence, and vocalizing processes or situations to assist in scoping / understanding what risks should or should not be applicable and why.
These discussions may also be effective in displaying pain points or areas of improvement to management in terms of bottle necks or areas where there may need in be an increase in resources.
Process Mapping/Flow charting
One common Internal Audit goal is to understand the business process and risks associated with operations. An activity that can be performed by an internal audit function is process mapping/flow charting. This is used as an activity to understand and visually represent things like the flow of data through a system, involvement of vendors or data processors within a process, technology used in transforming data, etc… Visually mapping out the process can isolate areas where organizations could expect to see the existence of a control, areas where a potential risk may exist, and portions of the process where the organization is relying on someone else to handle the process or data.
Once the process has been set up and a visualization of the process has been created, Internal Audit can work to maintain and update that understanding as the system evolves.
Control Self-Assessment
IA should be seen by control/process owners as someone within the organization that can discuss the current process, planned changes, and future goals with management to understand their impact to confidentiality, integrity and availability of information. Building this relationship through the use of internal discussions and activities like Control Self-Assessments allows control owners and process owners to explain the process and think through risks associated with it. This can aid in identifying potential vulnerabilities / risks, areas of needed improvement, and allow the decision makers to make risk-based decisions.
Control Mapping
From the activities that are preformed Internal Audit has the opportunity to identify controls that are in place within the organization. By linking these controls to owners, frequency, affected area of the organization, and assessments that they relate to, IA can begin to build out and understand where the organization sits in terms of risks and how they are being addressed.
This list can be reconfirmed and updated as the organization matures and as requirements change. By mapping the controls to assessments/requirements you can also find what compensating controls or activities exist if there were to be a failure or any irregularities found in the testing of the primary control.
Which Assessments?
Lastly many organizations are often striving to meet the requirements of a control’s framework (for example, SOC 2, ISO 27001, PCI DSS, etc.) and engage with a third-party independent auditor to perform the audit in the future. To prepare for the upcoming audit there are a number of great activities that can be performed by or with the assistance of IA.
One is doing a pre-assessment and have IA perform procedures that would normally be performed by the external auditors. Doing a pre-assessment can reveal how the organization would perform and discuss areas of improvement that would need to be made to show the external auditor that the organization is meeting the requirements of a specific assessment. If the organization thinks they have the controls in place and can show that they are meeting a certain requirement, then they are on the right path to meeting their compliance goals.
Once they agree that they have met the requirements of the assessment IA can assist in gathering the audit evidence to present to the external auditors.
By involving an IA team into the process there is an added voice that can assist in thinking through which evidence is the most appropriate or address multiple attributes in a single piece of evidence/test. By having this comprehensive view of the organization IA is poised to provide insights relating to which assessments are right for the organization, what potential controls may need to be added to address vulnerabilities, evolving/emerging risks including new technology and evolving legal and regulatory environments.
If you wish to further discuss how AARC-360 can help you with your IA function, whether augment your current IA or outsource it entirely, give us a call today to get started!
Zachary McCracken (Senior Audit Consultant , AARC-360)
