There is no guarantee in the internal auditor’s work that an audit error will never occur. However, internal audit can greatly reduce the risks by implementing some practices.
It is critically important to maintain the relevance and effectiveness of the program for ensuring and improving the quality of internal audit.
The risks faced by the company are constantly changing, and accordingly, it is necessary to regularly review the methodology for defining the topics that should be covered by internal audit verifications.
The head of the internal audit department, together with the team, should periodically ask the question “Are there audits involving high risks but not included in the current audit plan?” If there is an affirmative response, it is necessary to include such audits in the annual plan instead of audits, related to less significant risks.
Monitoring of all relevant customer information and conducting an effective risk assessment significantly reduces the risk of an audit mistake. In addition, any deviation from the planned audit procedures should be agreed upon by the head of the internal audit department.
Quite often, auditors do not spend enough time studying and analyzing the internal control system, being in a hurry to move on to testing controls. However, a deep understanding of the structure of internal controls allows the auditors to disclose the causes of the violations detected, rather than focusing on the removal of symptoms.
The timely involvement of the head of the internal audit department in the audit process plays an important role in managing the risk of an audit mistake. In order to identify possible problems in the audit process in advance, the head of internal audit or other managers, who are delegated control over the audit, must review the working papers, discuss violations detected with the auditors, participate in meetings with clients.
When appointing a team to conduct an audit, it is important to ensure that auditors generally have the necessary knowledge and competencies, and that the team leader has the skills necessary for effective project management. The qualification of the audit team is particularly important if the subject of the audit is technical or relates to a high-risk area.