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Conducting an internal audit.


Voice activation applied, sorry for typos.


To examine and evaluate the activities to help staff effectively do their responsibilities.

Furnishings staff, analysis, appraisals, recommendations.

Usually conducted by inside staff member.  Why not outside individual.(let's start a new company).

Should be a continuous process.


The Advantages.

Management's attention will be directed to the key business issues.

Gives management confidence, identifies opportunities for improving, early notice of potential problems.


Time-consuming, take managers away, threatening staff members.



1.  List objectives, relative to assignment.

Financial, how is the money handled.  Process and individuals.

Administrative controls, are they conducted to business.  Commonsense?

What systems are in place, across the department and across the enterprise.  Value for money?

Know your priorities.


2.  Prepare a detailed brief.

Sets detailed priorities, main issues, portion of time spent per priority.

3.  Choose your auditor.

4.  Inform your auditor.  Brief them.

Strategic or business plans.

Standing orders, goals and memorandums, internal procedure manuals, key personnel, organizational chart.

Verify communications are clear between parties.

Agree on the objectives of the audit.

Agree on a timetable, plan of action and find out if further information is needed.

5.  Identify the key controls to meet audit objectives.

Existing procedures for controlling the key areas to be examined.

6.  Evaluate the controls.  Can they be improved.  Where is the weakness, or fraud likely to show.

Call into the system, as a new customer, and verify a successful operation.(nobody does this,).

See No. 7.

7.  Test the system.  Choose what number of activities or transactions at random.  Trace backwards.

What are the procedures and rules.  Do the people follow them.  Degree of compliance.

8.  List areas for further investigation.

Find areas of concern that need more thorough investigation.

Look at closely.

Increased timeframe, so exceptions are not the rule.

Was it an exception, or a recurring problem.

9.  Consider whether you are getting value for your money.

Has the market been tested, are the systems working in the most efficient way.

10.  Draft a report.

All findings, including recommendations, discuss it with everyone who participated in the audit.

This will help verifying the auditor has not misinterpreted information or processes.

11.  Produce the final report.

Should include an action plan, what areas are requiring strengthening, verify recommendations are practical, have a timetable, and a time to monitor progress.  Use the knowledge of the auditor as a guide.

That monitoring process, should be more covered in book.

12.  Take action.  Act on the findings, monitor actions, changing written instructions, manuals, procedures, alerting to staff, may be additional training.


The dos.

Brief staff on the benefits of audit.

Concentrate on the high-risk elements identified.

Set an action plan as realistic.

Keep staff informed, especially with positives.  The negatives will come no matter what.

Monitor progress toward action plan.


The dont's.

Do not rely on audit as a day-to-day management technique.

Don't expect the miracle cure.


Thoughts starters.

Have you defined the nature and scope of the internal audit.

Have you establish what the system is trying to achieve.

Have you identify the key controls.

Are your staff informed.


End of data.




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