Internal audit administration can help organizations better understand and manage risks, make better decisions, and achieve their goals more effectively. Internal audit functions face several challenges, including being viewed as a siloed cost center, struggling to market their value within their organization, and stakeholders not fully understanding expectations. However, tools and opportunities can help overcome these challenges, market the value of internal audits and maintain effectiveness throughout the audit lifecycle.

Try Using a Questionnaire

One such tool is the Internal Audit Feedback Questionnaire, which can be used to gather client feedback and measure client satisfaction. The questionnaire contains sample questions related to:

• How clients evaluate the overall performance of internal audit
• How much value clients believe the audit provided
• If clients would recommend internal audit to others

By asking these questions, internal audit functions can assess their efficiency, effectiveness and timeliness, and make improvements accordingly.

Five Opportunities to Promote Internal Audit Administration

Internal auditors can market their department and showcase its value throughout the audit lifecycle through five main opportunities:

1. During a risk assessment
2. Establishing a rotational auditor program
3. During an audit
4. When presenting audit results
5. Through partnering with other assurance teams

By seizing these opportunities, internal auditors can show the benefits of an internal audit to the rest of the organization, break down company silos and become an integral part of the organization's success.

Why (and How) to Build an Internal Audit Department

If feasible, build an internal audit department. Why? Having an internal audit department greatly increases the level of audit administration performance of a company. This translates to increased efficiency and effectiveness companywide.

Building a successful internal audit department requires careful planning, relationship-building, hiring the right people, fostering a strong team culture and embracing change. The same is true for building an internal audit program. Whether building a department or program, the first steps include:

• Determine the driving factor behind the change.
• Create internal audit policies, procedures and risk assessments.
• Work with the existing team to ensure a smooth transition to the new department or program.
• Build relationships and establish expectations with leadership — essential to starting any successful corporate initiative.

Internal auditors must also develop a talent management strategy to build the internal audit team’s next generation. Organizations must leverage risk-focused talent management strategies to attract and keep quality talent. By doing so, internal audit departments can become flexible and agile, and adapt to changing business needs, becoming trusted advisors to the organization and delivering value to the business.

The Usual Suspects: Templates, Procedures and Policies

Any successful administration program involves common tools of the trade. These tools (internal audit administration templates, procedures and policies) must be fit-to-purpose to ensure that they support an internal audit administration initiative.

Procedures

Internal audit administration procedures ensure that internal auditors have a clear understanding of their role and responsibilities and (especially) the expectations of the client. For procedures to be effective, communication lines — both internal and external of the audit team — need to be explicit.

When procedures are well-designed, they are easily understood and subsequently reduce operational friction. An important procedure every audit program should have relates to maintaining clear communication channels for the auditor to provide regular progress updates to the client.

Policies

Internal audit administration policies should be designed to ensure that internal auditors follow best practices and comply with relevant laws and regulations. Organizations should also design policies to mitigate risks associated with internal auditing, such as the risk of fraud, conflicts of interest and breaches of confidentiality.

Templates

Templates for internal audit administration can ensure that all internal audit processes are standardized and consistently followed. The templates can support audit planning, fieldwork and reporting. Standardizing processes with templates ensures that the auditor team follows best practices, which improves the quality of the audit and reduces the risk of errors or omissions.

Risk Management

Organizations should also identify and manage internal audit administration risks. The risks associated with internal auditing can include the risk of fraud, conflicts of interest and breaches of confidentiality. Internal auditors must take appropriate steps to mitigate these risks, such as implementing appropriate controls and monitoring them regularly.

Additionally, internal audit teams must be mindful of the risk of information technology failures, which can impact their ability to carry out effective audits. For example, if the organization's electronic data is compromised, it may become more challenging to assess internal controls, monitor compliance with policies and procedures, and provide assurance for the integrity of financial and nonfinancial reporting.

Effective risk management involves identifying, assessing and prioritizing risks; developing appropriate mitigation strategies; and monitoring risks regularly to ensure that they remain within acceptable levels. By implementing effective risk management practices, organizations can ensure that their internal audit function is a valuable asset, providing objective and impartial assurance of the organization's operations, risks and controls.

Lack of Independence: A Significant Internal Auditing Risk

A major risk related to internal auditing is the potential for a lack of independence specific to the audit team. The internal audit team should remain objective and impartial in their evaluations, and their findings should be free from any influence or pressure from management or other stakeholders. This independence is crucial to maintain the integrity of the audit process, and internal auditors must ensure that they are not put in situations that may compromise their objectivity.

One way to ensure independence is through the development and maintenance of an effective internal audit charter. An internal audit charter outlines the purpose, authority and responsibility of the internal audit function, including the scope of work, reporting lines and accountability. The charter must also include provisions for the internal audit team's independence, such as the ability to communicate findings directly to the board of directors or an audit committee.

Keep the Radar On

The role of the internal auditor is to assess risks and provide assurance to stakeholders that the organization is operating effectively and efficiently. If the internal auditor fails to detect significant risks or control deficiencies, it can result in reputational damage for the organization, which can ultimately impact its financial performance and break stakeholder trust.

Internal auditors must remain vigilant about the risks of external factors that can impact their work. Changes in regulations, market conditions or industry standards can impact the risk profile of an organization and, consequently, the scope of internal audit work.

Audit professionals should continually assess the impact of these factors and adjust their audit approach to ensure that they assure relevant risks. To ensure maximum effectiveness, auditors must aim to remain objective and impartial in their assessments. Doing so from the beginning of an audit allows audit professionals to maintain open communication with stakeholders and report findings transparently.

Wrapping Up

Audit professionals face several challenges when it comes to internal audit administration. These challenges can be addressed by using tools like the KnowledgeLeader Internal Audit Feedback Questionnaire, and by seizing opportunities to market their program area or department to the rest of the company. Relevant tools and opportunities allow auditors to demonstrate the benefits of internal audit administration to the organization, break down silos, and become an integral part of the company's success.

Using internal audit administration best practices can manage risks effectively and ensure that the internal audit function provides valuable assurance and advice to stakeholders.