Mastering the basics: Your guide to getting started with internal auditing

In the world of business, where trust is currency, internal auditing acts as a reliable guardian. Think of it as the watchful eye ensuring everything runs smoothly within a company.

Let us uncover the basics of internal auditing- how it keeps businesses on track. We will take a look why it matters and how it plays crucial role in the success of the organization. Let’s unravel the mystery of internal auditing and understanding it’s simple yet powerful impact on the health of the business.

During an internal audit, The organization’s audit team checks its internal systems and processes to ensure everything is going on track.

Regular internal audits are essential for every organization atleast once in six months, to evaluate and improve their internal processes, controls, and performance. If the audit team finds any problem , they address it , fix it which helps the organization run better.

What is Internal Auditing?

Internal auditing is a systematic and disciplined approach to assessing and enhancing the adequacy and effectiveness of the organization’s governance , risk management activities, process management , financial statements and documents maintenance.

Forms of Internal Auditing

An audit conducted by the team of the organization about the policies, procedures, and practices to make sure that they follow the legal and regulatory requirements, Internal policies and agreements that is called compliance audit.

When the team of the organization conducts an audit on the efficiency of the operations performed in the organization then you can perform the operational audit.

Financial auditing involves a systematic examination of financial records to ensure accuracy, compliance, and adherence to accounting standards, providing stakeholders with confidence in the reliability of financial information.

Technology is important for organizations because it helps with planning and communicating. Information technology audits, which are checks on how well an organization’s technology systems are working, are done by people within the organization.

Factors to take into account

The team of the organization should consider the 5c’s that acts as a support system to perform the audit in an organization.

Criteria- The team of the organization evaluate the current state of the organization and this serves as the foundation for the internal audit.

Condition- The team of the organization should analyse if there is any exceptional cases in handling the internal audit in the organization.

Cause- Always human need reasons to perform something, the team of the organization analyse and draft the causes which push them to conduct the audit.

Consequence- After the audit, The team must communicate the reports and non-conformities of the internal audit and suggest the corrective actions.

Corrective action- The audit team’s responsibility lasts till bringing the effectiveness in implementing the corrective actions and evaluating it.

Steps to perform the Internal Audit

Let us imagine you are assigned with the task of performing an internal audit in a hospital. Let us see what steps need to follow while conducting the audit.

Step 1: Determine what you will audit

In hospital, The team of the hospital should determine what you are going to audit either the Patient care quality, Financial Management , Information technology and security, or patient risk management. The Audit team must decide in which area they are going to perform an audit.

Step 2: Determine when will you audit

The team of the hospital those who are going to perform an internal audit, when they are going to conduct an audit and the timing should not affect the patient and the other regular activities in the hospital. By informing the timing in advance, then it will be easier for the department people to get ready for the audit and make the documents available.

Step 3: Determine how will you audit

It’s the responsibility of the audit team in a hospital, to determine how to perform an audit. The internal auditors can decide the evaluating method for the audit, The team must analyse the competency of the employees, patient records, Financial statements of the hospital , Technical support and the insurance policies for the patients.

Step 4: Performing the audit

The internal audit team in a hospital should perform the audit in a planned manner, the members of internal audit can ask for the documents and analyse whether it is maintained properly. The audit team can make a check with the competency of the employee in the hospital and can review the documents that demonstrate the qualifications of the doctors and nurses. After completing the audit, The findings in the hospital internal audit to be communicated within the representatives of the hospital.

Step 5: Document the findings

As like external audit, The internal audit should be recorded and maintained as a document for further references. The hospital audit team maintain a document such as audit findings, Audit report, Audit attendance, employee competency evaluation record and other documents that supports to evaluate the effectiveness of the hospital management.

Conclusion

Internal audits instill confidence in the organization’s processes and practices by verifying that they are being carried out correctly. They serve as a trial run for external audits, allowing the organization to use the findings and reports to improve performance and prepare for future external assessments.

Addressing non-conformities identified in internal audits lead to continuous improvement and enhances the overall effectiveness of the organization.