Conducting Internal Audit: Tips for Small Companies



Conducting Internal Audit: Tips for Small CompaniesInternal Audit Guidance for Small CompaniesWorking through the content in module 3 may seem intimidating if you are a small company. It is likely not realistic nor necessary for small companies to implement a formal internal audit program. They can, however, incorporate the functions of the internal audit process into their operations. Every company, regardless of their size, should be reviewing and evaluating all aspects of their operations on a regular basis to be sure they are consistently meeting all requirements. Small companies may also find it challenging to initially provide staff with auditor training. Start by checking online options for internal auditor training. Some are more formal and credential based while others have a general competency focus. Use search terms such as online internal auditor training, internal auditor certification programs, internal auditor training for food processing/agriculture production. Post-secondary institutions and industry associations may offer courses and workshops where you can acquire auditing knowledge and skills. Some may be related to particular standards or certifications while others will focus on general skills and knowledge. Alberta Food Processors Association offers internal auditor training at various times. Below are tips to adapt the internal audit function for a small company when working through module 3.Prepare for the Internal AuditSet the internal audit scheduleUse a chart or table to identify the operational areas and activities in your systemDivide the review of these areas into timeframes (weekly, monthly, quarterly) that works with operational demands – this becomes your internal audit scheduleEstablish audit parametersIdentify the documents that will be reviewed i.e. procedures, forms and the operational activities that will be observed for each area i.e. handling, labelling, chemical applicationIdentify the criteria (requirements) for evaluating each document and operational activity – this what to look at and what to look for during the audit – assesses if you are meeting the requirementsSelect audit teamIn small companies everyone may be on the audit teamWhere it’s possible it’s best that the person reviewing the area is someone other than the person who routinely does the activity Identify the person responsible for completing the review of each areaPrepare internal audit plan and checklistThe chart or table with the information described above forms the basis of the audit plan and checklistReview this in conjunction with your planned operations to ensure the internal audit tasks can be completed. This means that the person doing the review has time and availability to do all identified tasks (including review of pre-audit documents), and the necessary operational activities will be occurring when this person is available. Make sure everyone involved is aware of what is planned.Include time in the plan for everyone involved to meet and discuss the resultsConducting the Internal AuditIn small companies there isn’t typically a need to hold an opening meeting as everyone is usually aware of and involved in the internal audit activities Where possible maintain a level of separation between the person who has responsibility for an area and the person auditing the area. One person in the company may observe another carrying out a procedure or completing a form then switch roles to audit another operational area they are involved with. Likewise the person reviewing completed forms should not be the one who originally filled out the form and the person reviewing a procedure shouldn’t be the one who wrote it. In these circumstances have each internal auditor complete their own checklist. Analyze results from the internal auditThe review of audit findings, the closing meeting and creating the audit report are often combined when the majority of the people in the company are actively engaged in the internal audit.Each person would present what they found to the group based upon the audit criteria, followed by discussion to reach a consensus on what goes into the internal audit report. This isn’t about downplaying or disregarding audit findings. The purpose is the same as in a larger company where additional information may be presented by others in the company in order to clarify audit findings. The group may also discuss potential corrective actions. One member of the team could compile the internal audit report as decisions are made or this could be done after the conclusion of discussions. While the report may not have as formal a look as it could have in a larger company, a record of the internal audit findings still needs to be made. This allows corrective actions to be tracked and evaluated as well as providing proof to external auditors that the company is reviewing their system to keep it current.Respond to internal audit findingsIt’s not unusual for everyone in a small company to be involved in coming up with corrective actions in response to internal audit findings. It is important to take the time to accurately assess the root cause and create an effective solution. The same people that audited the area will likely be involved in assessing if the corrective actions are effective and integrating the changes into the company’s system. Make sure to document all changes that were made and ensure everyone understands how the changes affect the operational areas they are involved in.Most of the effort initially involves listing all of the components and the associated requirements that make up the company’s system. Once this is in place it becomes an exercise in scheduling the review and coordinating this with operations then following through to make and maintain changes. Incorporating the internal audit function enables small companies with a way to systematically review and improve what they do which enhances their operational effectiveness and enables them to take on new opportunities for sustainable growth. ................
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