What is the Internal Audit Process?
Generally, the parties involved in an internal audit are the auditors, the audit committee, and the department being audited.
Step 1 – To start with, the internal auditors will randomly sample documents, review manuals and observe how work flows through a department, or the entire company. They will also look for signs of asset mismanagement, fraud and also test risk management controls./p>
They typically analyse documents outlining a company’s mission, objectives and related performance, then determine how well these goals are being met. Using various assessment techniques, the internal auditor will examine the effectiveness of internal control procedures and determine whether employees comply with them.
These assessments can be completed after reviewing documents such as responsibility flowcharts, control policies and results from previous audits. When gathering information for their final report, internal auditors will observe operations firsth and, take notes, review official documents and interview employees.
Step 2 – Next, the internal auditors prepare a report listing their findings, and send it to the audit committee. The report includes a summary of the procedures and techniques used for completing the audit, a detailed description of findings and suggestions for improvements to internal controls and procedures.
Step 3 – Finally, the committee reviews the report, and suggests suitable improvements to the departments concerned.