Auditing Guidelines - Writing an Effective Risk-Based Internal Audit Program

Let's get started with a general discussion concerning the purpose and objective of an audit function program so that you can clarify the goals that you are hoping to achieve. An internal audit function program is made use of to guide you or your staff through the audit method and ensure thorough and total coverage and documentation of the audit itself. In general, it really should illustrate the overall function performed, the work paper references for any applicable support papers, the person who performed the function, the individual who approved the work, and any applicable summarization notes necessary to clarify points and/or outcomes along the way. As a general guide, the individual actions or actions to your audit is going to be laid-out down the left-hand column of one's program plus the function paper references, auditor initials/approvals, and any summary notes will be represented by subsequent columns, producing a matrix or table-like effect for your program. For this cause, many function programs are normally produced in table or spreadsheet formats like Microsoft Word or Excel.
Next, let's address the general framework and methodology of the generic audit program. Your audit function program must broadly follow the flow and methodology of a common risk-based internal audit engagement. When it comes to methodology, most internal audits commonly follow an iterative series of steps that approximate the following:
1. Understand and document the processes and procedures of the function or region becoming audited.
2. Define the objectives of the region or function being audited.
three. Define the risks or threats towards the achievement of those objectives.
four. Understand the controls in location to mitigate the risks to an acceptable level or the control weaknesses that exist in support of the risk.
five. Test the controls for adequate style and operating effectiveness and/or quantify the impact of control weaknesses or gaps.
6. Report your findings and give recommendations for control and/or operating efficiency improvements.
7. Monitor and report managerial mitigation efforts for control weaknesses identified that had been outside of management's risk tolerance level.
These processes or steps commonly fall into 1 of 4 buckets or stages typically related using the internal auditing method; Planning, Fieldwork, Reporting, and Follow-Up. Aligning the activities inside your audit program with these categories and steps will assist to make certain thorough and diligent completion of the entire audit cycle.
Recall, too, that the audit function program is only a guide and just isn't intended to be a static document. The activities and tests that you perform all through the audit cycle are bound to deviate from the original program based on the results of one's audit work. Don't be afraid to stray off the path so long as you evaluate your activities in light of one's overall objectives, sustain perspective on your resource limitations, and communicate the nature of one's activities to your supervisor or manager.
Developing consistent, high-quality internal audit function programs takes practice and patience. On the other hand, for those who follow the guidelines and suggestions noted above you'll come across yourself far ahead of the understanding curve and properly on your technique to auditing stardom, or at the very least a more effective auditing career.
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