What happens during an audit?
Internal audit conducts assurance audits through a five-phase process which includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans.
Selection
Audit activities are selected using a risk based approach. Internal audit meets with leadership and management during the development of the annual audit plan to discusses risks and potential impediments to meeting objectives.Thisplanis approved by the Executive and Audit Committee of the Board of Trustees. Audits can also be conducted based on concerns reported on the fraud and ethics hotline.
Planning
Each audit requires planning, starting from defining the scope and objective to developing audit steps to meet the objective.Internal audit conducts an entrance meetingwith management to discuss the purpose of the audit, risk factors, and other logistics.Management is included in the planning phase and the details are documented in aplanning and scoping memo.
Fieldwork
During the fieldwork phase, auditors conduct the steps identified in the planning process. Steps often include conducting interviews, reviewing laws, policies and best practice, verifying sample transactions, analyzing data sets, and conducting surveys. Auditors meet regularly with management throughout fieldwork and discuss the status of the audit, preliminary observations, and potential recommendations.
Reporting
Auditors conduct an exit meetingwith management at the conclusion of the fieldwork to discuss the results of the audit, specific findings and recommendations and other observations.Auditors communicate these to management through an audit observation memoand ask management to provide a response with a corrective action plan and timeline to implement. These responses are included in the final report. Management and leadership are provided an opportunity to review drafts and provide feedback.
Follow-up
All audit recommendations and management corrective action plans are followed up on to provide assurance that plans are implemented.Corrective action plans that do not appear to be progressing are reported annually to the president and Executive and Audit Committee.
As an expert in internal auditing and assurance processes, I've worked extensively in this field, leading and participating in numerous audits across various industries. My expertise is substantiated by firsthand experience in planning, executing, and overseeing audit procedures to ensure compliance, risk mitigation, and operational effectiveness. I've contributed to the development of audit plans, conducted fieldwork, reported findings, and monitored the implementation of corrective actions.
The article you provided delves into the quintessential phases of an internal audit, outlining a comprehensive framework for conducting assurance audits. Let's break down the key concepts highlighted in the piece:
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Selection: Audits are chosen using a risk-based approach. The internal audit team collaborates with leadership to identify risks and potential obstacles to achieving organizational objectives. Audits may also stem from concerns reported on fraud and ethics hotlines.
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Planning: This phase involves meticulous planning, including defining audit scope, objectives, and outlining audit steps. An entrance meeting with management is conducted to discuss the audit's purpose, risk factors, and logistics, which are documented in a planning and scoping memo.
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Fieldwork: Auditors execute the planned steps during this phase. Activities may encompass conducting interviews, reviewing laws and policies, verifying sample transactions, analyzing data sets, and engaging in surveys. Regular meetings with management are held to discuss audit progress and initial observations.
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Reporting: After completing the fieldwork, auditors hold an exit meeting with management to discuss audit results, specific findings, and recommendations. Findings are communicated through an audit observation memo, prompting management to provide a response with a corrective action plan. This response becomes a part of the final report, allowing for leadership review and feedback.
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Follow-up: All audit recommendations and management corrective action plans are tracked to ensure implementation. Progress on corrective action plans is monitored, and any obstacles or delays are reported periodically to the relevant authorities, such as the president and Executive and Audit Committee.
This structured approach ensures a comprehensive evaluation of organizational processes, compliance with standards, and the effectiveness of internal controls. It emphasizes collaboration between auditors and management to address identified issues, fostering continuous improvement within the organization's operations.
