Hate Internal Audits? Read This.
There are two general truths about internal audits:
- They provide you with the information necessary to make pivotal decisions that reduce risk and improve operations.
- Federal and state regulators expect them of your organization.
For whatever reason, Truth #2 frequently overshadows Truth #1. An organization spends the time, money, and hassle conducting an internal audit seemingly only to prove that it happened. Auditors’ findings get filed away, their recommendations go ignored, and the organization continues with business as usual.
Why does this occur? A recent article in Internal Auditor explains that it’s not just a matter of resources (i.e. corrective actions can be expensive), but expectations and communication between auditor and auditee:
“As with many instances, when two parties fail to see eye to eye, inadequate or flawed communication may be to blame. In the case of unaddressed recommendations, perhaps the internal auditors did not fully explain the value of a recommendation, or they did not adequately define what ‘recommendation’ means within the organization’s culture, or they did not describe the potential consequences of failure to implement the recommendation.
Or, perhaps it is not a case of inadequate communication, but too much of it. ‘Many times, auditors tend to include every detail of the audit in the report,’ [internal audit director Michael] Levy says. ‘I find that executive management and the board are no longer looking for the ‘novel’ version of reports that has become common over the years.’ Internal auditors must focus on creating well-organized reports that stick to the point, covering what the reader needs to know, not everything the auditor knows. Each recommendation should be supported by a full description of the related risk, which will help establish the importance of the recommendation and the potential implications if it is left unaddressed.”
In other words, auditors need to remember their audience: a report is as relevant to the business as its author makes it. It’s another way in which workforce compliance can support an organization’s bottom line—as long as leadership is able to see it as an opportunity or a necessary improvement rather than another regulation-driven hassle.
Whether you’re an audit crusader or an audit skeptic, join us next week for our Internal Audit Insider Tips webinar. In addition to reviewing regulatory requirements, we’ll show you how audits revealing information about your organization’s competitive advantages and opportunities for growth, help you proactively identify trends and opportunities for corrective action before issues can become bigger problems, and can even save you money upfront on attorney and adviser fees. Click here to sign up.