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 Security Standards Council, 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.
Consider Your Industry and Clients
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.
Infrequent Internal Audits Lead to Increased Risk
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.
How to Prepare for a Successful Internal Audit
It is important to make internal audits a regular practice. 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 set objectives for internal auditing that will encourage clear and concise reporting by the employee. They should cover:
- the business objectives,
- control systems, and
- regulatory compliance standards
Outlining goals will ensure employees understand how performance will be measured.
Policies should put employees 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.
Combine 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.
Prepare the Needed Documentation.
1. Policies and Procedures – Your internal auditor will use your baseline data, such as your policies and procedures, as the metric against which he or she will review your details of the year’s operations in action. Make sure you provide your auditor with the most updated list of policies and procedures that you, your company’s CEOs, CFOs and IT team members produced over the year.
2. Service Agreements with Business Associates and Service Organizations – Your organization must ensure that third-party service providers have aligned their control environment in order to protect their valuable data. Let your auditor review the service agreements you have signed with each organization to make sure your organization is fully covered. He or she will also review the results of any System and Organization Controls (SOC) for Service Organizations reports that are relevant to the audit at hand to gain insights into the service organization’s controls and overall operations.
3. Results of Any SAQs or Tests Performed Between Audits – Sometimes businesses are required to perform testing, such as pen tests and vulnerability scans, or do self-assessments between audits. Interim testing will help the internal auditor review performance and assess gaps.
4. Incident Reports – In the case of a data breach, it is important to document everything that occurs to provide every detail to your internal auditor during your audit. Develop a form that serves as a method of communicating the initial known details of a possible or actual information security incident within your organization. This report will help your internal auditor understand the nature of the incident better, as well as how he or she can most accurately and fairly report the data breach and everything leading to it.
Get Ready for Your Next Auditing Engagement
If your company is in need of internal audit services or you would like to receive more information about I.S. Partners, LLC, use the contact form below.