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INTERNAL AUDITING PROCESS - Coggle Diagram
INTERNAL AUDITING PROCESS
COMMUNICATION
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Factors that influence the quality of communication :pencil2:
Quality
Accurate
Objective
Concise
Clear
Constructive
Complete
Timely
Process of preparing an audit communication :pencil2:
Preparation of the initial draft of the report
Review and edit by member of the audit team
Preparation of the revised audit report
Review and edit by the manager of audit assignment
Preparation of the second revision of the report
Review and edit by the head of internal audit department
Preparation of the third revision of the report
Combined review and edit by the audit team leader, manager and director
Preparation of the ‘discussion draft’ for review by auditee management
Review by management and response provided on audit findings
Preparation of the final draft of the audit report for distribution
Criteria for quality communication :pencil2:
Executive summary or overview of the whole
engagement
Engagement’s objectives and scope
Condition, criteria, effect, cause, observations
Applicable conclusions
Recommendations
Action plans
Performance Standard 2400
Internal auditors need to communicate engagement results
FOLLOW-UP
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Performance Standard 2500 :pencil2:
Establish a follow-up process to monitor and ensure that management actions have been effectively implemented or that senior management has accepted the risk of not taking action
Role of internal auditors :pencil2:
Timely review
Respect the internal audit customer’s stewardship
Communicate the
evaluation
Avoid from interrupting the operation of the auditee
Role of management :pencil2:
Monitor the follow-up process, check with and encourage the internal customer to assure an appropriate response to the audit report
Assess or approve the adequacy and cost-effectiveness of corrective actions and take needed steps to rectify observed inadequacies
Role of IA Customers :pencil2:
Provide proper responses
Assist and cooperate
Inform discrepancies regarding the recommendations
Communicate the progress of corrective action
Choose an appropriate measure for the company
Ensure the measures taken are cost effective
Ensure the corrective measure is enough to avoid the problem
EVALUATION AND CONCLUSION
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Performance Standard 2320 :pencil2:
Internal auditors must base conclusions and engagement results on appropriate analysis and evaluations
Opinions and recommendations are based on :pencil2:
Criteria: The standards, measures, or expectations used in
making an evaluation and/or verification
Condition: The factual evidence that the internal auditor finds
during the examination
Cause: The reason for the difference between expected and
actual conditions
Effect: The risk or exposure the organization and/or others encounter because the condition is not consistent with the criteria. In determining the degree of risk or exposure, internal auditors must consider the effect their engagement
Conclusion should consider :pencil2:
whether the conclusion encompasses the entire scope or
specific aspects of an engagement
program objectives and goals
to review alignment to organizational goals; whether the
organization's objectives and goals are
being met
whether the activity under review is functioning as intended
an overall assessment of controls or area under review
whether the scope is limited to specific controls or aspects of
the engagement
Factors to consider when developing recommendations :pencil2:
Should be specific to the problem and offer some alternatives or advice to solve the problem
Avoid dictatorial connotations by using ‘should’, ‘ought’ or ‘must’
Findings must be taken seriously by the management/auditee
but not always obligated to accept the audit recommendations
Should be suited to the auditee’s needs and considerations