Internal Audit: the Key Stages in Setting it Up!
Internal audits have been one of the main tools for providing assessments to ensure the monitoring of activities and the resilience of organizations following the economic disruption of 2020. Internal audits are the benchmark for overall performance and risk management!
Internal audit is an essential part of an organization’s continuous improvement process, designed to enhance its efficiency and performance. Beyond the notion of control, internal audit is above all the ideal opportunity to exchange views with all employees and to rethink internal activities. What does an internal audit involve? How do you get started? Find the answers in this article.
What is the Purpose of an Internal Audit?
Internal Audit Goals
An internal audit, also known as a first-party audit, is an independent process designed to assess how well an organization is functioning. In general, to obtain a diploma, it is necessary to pass an examination. So the best way to succeed is to be tested. Remember your ‘bacs blancs’ and your baccalauréat to assess your knowledge. It’s the same in terms of quality. To guarantee an external audit, you need to pass your internal audit, also known as a mock exam. The aim is to check the conformity of your quality system by comparing the results obtained with the provisions laid down beforehand. In collaboration with the people being audited, this verification is based on analysis and information gathering. It may be based on a standard or private reference, a procedure, an action plan, or a customer specification.
The audit highlights what is working well in your company, over and above the detection of failures concerning a repository. The aim is to use what works to solve what doesn’t. Some large companies have set up specialized departments responsible for carrying out internal audits and monitoring actions at all group sites. By guaranteeing impartiality, they ensure greater success in certification audits.
Who carries out Internal Audits?
In general, the internal audit is carried out by one or two auditors (trained in the audit technique). These auditors report directly to management and are members of the company’s staff. They must be autonomous and have the necessary skills to carry out the audit. They support the people involved in the audit.
How do you conduct an Internal Audit?
The internal audit, which is carried out in several stages, is generally entrusted to one or two auditors (trained in the audit technique).
Step one: Planning
It is important to plan internal audits to determine the scope of the audit and the departments, activities, and positions concerned. The objectives of the internal audit should be defined and specified at this stage. Whether they relate to production, quality control, or financial management, it would be a good idea to highlight them so that the auditor can focus on them. After that, you can decide who will carry out the audit. The auditor should be chosen based on his or her abilities, listening skills, and so on. In other words, all the qualities needed for the audit to be successful and relevant.
The schedule for internal audits must be established: some activities must be audited every six months, while others are more likely to be audited annually. A document review should be carried out to create an audit plan, which should be communicated at least two weeks before the audit. This review is crucial because it enables the auditor to examine all the documents relating to the activity to be examined.
The standards, the report of the previous audit, the associated procedures, the minutes of the last management review, and the list of non-conformities associated with the activity in question are just some of the documents to be taken into account.
The auditor will prepare the audit questionnaire in the form of a checklist after reviewing all the documentation. To avoid forgetting anything, it is best to prepare the questions to be put to the auditees in advance.
Step two: Carrying out the Internal Audit
• The Kick-off Meeting
The audit plan was discussed at the kick-off meeting: the auditor(s) outlined the objective of the audit, the methodology, and the various points to be addressed. It is important to stress that the timing must be respected. This is also an opportunity to remind all participants that the audit is an exercise in continuous improvement, designed to highlight good practice. To ensure that the internal audit runs smoothly, it is essential to make the whole team aware of the project, which will guarantee good cooperation within the team.
• Audits (documentary and field)
It is suggested that the audit begins by checking the documentation (in particular the auditor’s ability to access the documents) before proceeding with the on-site visits. These on-site interviews allow the auditor and the auditees to exchange views using open-ended questions:
“How do you carry out this task?”
“How do you react in the event of non-compliance?”
It is essential to maintain stability in the exchanges, which can be difficult to establish. The person being listened to must do most of the talking, but beware: the listener is also the one who does most of the talking! It’s not always easy to know what to do as a listener! The auditor must be objective, non-judgemental and strict while retaining a degree of flexibility where necessary.
•Final Meeting and Results
Step three: Drafting the Report
After the audit, the auditor(s) must write a report containing both the audit questionnaire and the conclusions of the closing meeting. It is advisable not to wait too long between the audit and the writing of the report so that the conclusions are still fresh in your mind!
What happens after an Internal Audit?
It is essential to engage the auditees and the whole organization in a process of continuous improvement beyond the audit and its assessment. This involves creating an action plan based on the observations, gaps, and areas for improvement that have been identified. In the long term, monitoring this plan enables us to check that the actions defined have been carried out.
Some organizations see internal audits as an activity that does not generate value, despite the many advantages they offer. This is because internal audits enable problems to be identified at an early stage so that rapid action can be taken to propose sustainable solutions. What’s more, remote working has meant that the overall organization of internal audits has had to be rethought, a situation that has encouraged the use of digital technology.