Auditing provides
accuracy management and other tasks throughout the year. At the end of each
fiscal year, every company, regardless of its size and type, needs an internal
audit for critical decision making and addressing any hidden issues that might
be hurting the business.
Businesses demand
a variety of internal supervision to prevent irregular transactions, the performance
of the company, and to improve productivity. Internal auditing does not merely
focus on the internal handling of the company, but it allows the company its
pursue its corporate aims.
How to Avoid Internal Audit Mistakes?
Your company
needs internal auditing to analyze its operations and management decisions.
This way, internal auditors can prevent any accounting irregularities and
fraud. However, many internal auditors commit small mistakes that end up
causing a lot of damage to the business.
Here are a few
tips to avoid internal audit mistakes and run things smoothly.
1. Add Value
When it comes to
auditing, the word that instantly comes to our mind is micromanaging. It’s
impossible to conduct proper auditing without micromanaging the whole company. People
generally don’t get well with an internal auditor because it is his job to
micromanage every single receipt and click of the keyboard to identify any
intentional or foreign problem areas that could harm the company.
In order to add
value to the audit, instead of just focusing on big matters and macro data, get
to the basics and start from there. Many auditors fail to identify the root
cause of the problem because they don’t micromanage. It does not mean that you
should forget about the bigger picture, adopt a balanced process that focuses
in-depth into every aspect of the business without affecting employee’s
productivity.
2. Planning
You cannot
accomplish anything without proper planning. The same goes for internal
auditing. You should have a plan from the beginning so you can ensure that your
valuable time and resources are used effectively. Therefore, it is crucial to
plan ahead of time before the auditing to make sure you can focus on all the
problem areas.
Before the
auditing, do your research and form a strategic plan that covers all the areas
of the business, so there are no legal problems later. Developing a strategic
plan can be overwhelming, but here is a breakdown of a successful strategy:
· Determine where you stand at present
Instead
of thinking about where you WANT to be, use your company data to form an
accurate picture of where your business is. This is where most small businesses
fail, so its recommended to consult one of the top audits
firms in Dubai
to get a clear understanding of your position in the market.
·
Identify your
goals
Focus on your goals and where you want your
business to be over time. Accurately define your missions and visions to make
sure you understand areas that need improvement.
·
Accountability
Determine who is accountable and who makes
decisions. For proper internal auditing, you need to make sure you are familiar
with the communication channels, time allocation, and human capital in the
company.
·
Review
Everything
After forming the plan, schedule several
reviews of the plan to ensure that it performs as designed. This way, you can
refine the plan and address any loopholes if necessary.
3. Prepare for unexpected
When you go for internal auditing, you can
never expect things to go as planned, no matter the meticulous planning.
Therefore, the auditor should always be prepared for the unexpected. If you are
already prepared for all the scenarios, your team can efficiently manage the
solution to an unexpected problem.
Here are a few tips for managing the unexpected during internal auditing:
- Identify
possible problems
When you are planning, expect things
to go wrong, even if you are not sure about what. Look out for potential risks
because earlier you recognize that a problem exists, the more quickly you can
take steps to remedy the situation.
- Don’t
Panic
When something does pop up, Don’t
panic as it would cloud your judgment, creating future audit problems. Take
time and evaluate the situation and think about your available options.
- Prepare
in Advance
During the planning phase, create a
strategy for dealing with unexpected complications. It’s impossible to plan for
something unforeseen, but with enough research into the industry and critical
thinking, you can work out a plan for worst-case scenarios.
4. Expand your
Analysis
Most companies collapse because internal
auditors are preoccupied with small scale risks that they fail to look at the
bigger picture. According to the Chartered Institute of Internal Auditors, the internal auditor should “help the board and executive management to protect the assets,
reputation, and sustainability of the organization.”
Instead of wasting time manually gathering
numbers and information, go for an automatic documentation and reporting system
that keeps you updated with new figures and data. You can also get advice from
one of the top audit firms to make sure your auditing is up-to-date and focuses
on all areas of internal governance, operations, decision making, risk, and
control culture.
5. Keep
Reporting Simple and to-the-point
What is the objective of an audit report? Some
might say it is to communicate the company’s objectives, goals, and scope.
Others might say it’s to highlight issues and recommend improvements. But the
ultimate aim of an internal audit report is entirely different. It is to
persuade the readers (management) to take action.
Most internal auditors don’t realize the
importance of writing style of the report and its impact on executive
management. Here are a few tips for creating a call-to-action audit report.
·
Keep the report short and don’t
overwhelm the reader with too much information and numbers.
·
Keep it simple by using clear and
direct language without technical jargon.
·
Organize your report to make the most
important ideas stand out. Use headings and different fonts to bring attention
to vital areas.
· Pay attention to details (grammar,
punctuation); otherwise, you lose credibility.
Keep Your Business Transparent and
Growing
At the time of pressure, make sure to avoid
internal audit mistakes by following these tips to get internal controls in
shape. You can also go for a professional financial audit, as it will give you
unbiased information regarding which area of your business demands tightening
up.
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