Creating a business takes a large amount of effort to get operations running at full capacity to match customer demand. Yet you are also engaging in a balancing act to increase the efficiency of operations while decreasing costs and ensuring the security of data that is compiled, used and stored. While sales reports and cost analysis documents can give you a greater understanding on how the organization is meeting business objectives towards growth and cost savings, there are also other areas of your business that requires occasional assessment to determine the strengths, weaknesses and vulnerabilities of operations. Internal auditing conducted by an appointed staff member can provide sufficient reporting to document the current operational health of your business organization and target issues that need immediate remediation.
Frequency of Internal Auditing
There are no hard set rules in regards to how often your organization should perform an internal audit. Often, the type of auditing procedures that you want performed will have an impact on the frequency of when an internal audit should be done in your organization. There are also a variety of other factors that will control on how often you will need internal auditing. For example, if you have obtained certification from an industry standard organization such as PCI DSS, you will need to have an internal audit performed by your Qualified Security Assessor on an annual basis to ensure that you remain in compliance.
For internal audits performed for quality assurance of products that will be shipped out to clients and customers, you may have a set of control measures that require internal auditing of products and production procedures on a weekly or monthly basis. If you wish to evaluate your management systems to determine whether processes and objectives are meeting company policies and regulatory compliance, you may have them performed on a quarterly basis or twice yearly. These are just examples of internal audit types your organization may need and the frequency of the audits for your particular business industry.
Avoiding the Infrequency of Internal Auditing
A problem that many organizations have is that when no issues arise during the internal audit, the number of audits that will be performed are reduced. As a business owner, you may believe that the time, expense and work required to have an employee engage in an internal audit is not cost productive for your operations. Once you reduce the number of audits, employees who are given the task may lose interest or faith that their reports are important to upper management. In time, they only go through the motions when creating their audit reports, as problems that crop up are overlooked until the issues become serious enough to have an impact on production processes.
Infrequent internal auditing increases the operational, financial and security risks of your organization as well as every customer or client that works with you. When the auditing processes become lax, it can turn into a domino effect that impacts the management staff and the morale of the employees. The chances of problems building to huge proportions that can essentially harm the organization increases to the point where you may have a difficult time bringing past production processes up to full capacity again. In some instances, the business never recovers as in a few short years it folds.
Making Internal Auditing More Productive
It is important to make internal audits the norm in your business organization. Setting up an internal auditing schedule, and performing follow-up auditing procedures can lower the business risks and help your management target issues during the early stages so the problems have less of an impact on processes.
Yet an internal audit is only as good as the continuing training and skills improvement that is given to the employee who will perform these assessments. Internal audit training will ensure that the employee will give an unbiased perspective when documenting problems and perform thoroughly assessments by providing information that can be used to provide actionable recourse. In addition, you will also need to create a set policy in regards to internal auditing that will encourage clear and concise reporting by the employee. These policies should outline the business objectives, control systems, and regulatory compliance standards so employees are knowledgeable concerning how control systems are meeting or failing to meet established objectives during auditing procedures.
The policy should also put the employee at ease that any problems that are reported will not have a negative impact on the employee’s job position. Some workers may be hesitant about reporting issues about the company because they believe upper management may take issue with their unbiased attestation reports and create a hostile work environment for the employee. Your business policies should address the internal auditing role of the employee that should not have any repercussions on other roles that the worker has in your business operations.
Combining External Auditing with Internal Audit Reporting
Engaging in internal audits as well as external auditing by a third-party CPA firm provides your company with a comprehensive checks-and-balances process for all areas of your company. With internal audits, you can immediately target issues and reduce risk management on a weekly, monthly, quarterly or yearly basis. When an external audit is performed, it will assess the possible improvements that were implemented in response to the previous internal audit and hopefully find no issues, allowing you to stay in compliance and seek re-certification if necessary.
When you are looking for a qualified CPA firm to provide external auditing of your information systems and internal security controls, let I.S. Partners, LLC offer the auditing solutions tailored to your business industry. Call us today at 215-675-1400 or receive an online quote as we can provide IT assessments, SOC audits, and internal audit and compliance services. We take the anxiety out of the audit and instead partner with our clients to help them reduce operational risks.