The audit process is unique for every organization depending on its needs, but there is a general approach that can be applied to almost every audit case. As we look at what is an audit process, it is also important to see how it changes within the context of GRC. We are talking about the internal audit process here – external audits are more complicated, because the external auditor has to make themselves familiar with the organization before the audit, while the internal auditor is already familiar with the way the business operates.

What is an Audit Process?

Audits are of crucial important in every business and institute. An audit allows businesses to find mistakes and take corrective measures. Any business that does not regularly carry out audits risks not finding out about problems before it is too late to fix them. However, one does not simply carry out an audit. If management wants an audit to truly be successful, it is important to follow the whole audit process. The audit process begins with planning and ends with a follow-up. (Operational audits are another form of internal audits which go more in-depth)

Audit Process Steps

The internal audit process has 4 basic steps:

Step 1: Planning

The first step is to plan an audit. Management will decide the scope and extent of the audit during this period. The audit committee will also decide where the audit will take place – which departments will be audited, and which employees will be involved in the audit. Including more people and feedback within the audit process allows for better audit results and insights. This is also the step where the duration of the audit will be decided – the auditor will then have a deadline to complete the audit and provide an audit report.

Step 2: Fieldwork

Fieldwork is the exploratory part of the audit process. During this step the auditor will step out into the field (hence the name fieldwork) and will observe and question. The internal auditor will take to key stakeholders as well as front-end employees to gauge the efficiency of the business processes being followed. The auditor will also make note of any non-compliance observed or any vulnerabilities observed which can result in non-compliance in the future. All such risks must be discovered and managed, which is why this step of the internal audit process is usually given the most time.

Step 3: Audit Report

Once the auditor has collected enough information to create meaningful insights and develop corrective actions, they go on to the next step of the internal audit process, which is creating the audit report. This audit report lists every significant finding the auditor found while doing the field work. The significant findings, be they errors or vulnerabilities, are then studied in-depth. The report ends with corrective actions – the auditors presents solutions to the deficiencies in the current processes. This report is presented to management, which then reviews it.

Step 4: Follow-up

Finally, at the end of the audit process steps, two types of results emerge, the NON-CONFORMITY and the OBSERVATIONS. While the first details the gaps found, that is the points of discrepancy between what is defined in the procedures, or the regulatory failures; the latter are indications for the application of different processes aimed at obtaining improvements, which propose achievable objectives through the adoption of alternative measures (processes, functions …).

The auditor then goes back to the significant findings and sees whether the problems have been corrected. If all the vulnerabilities have been closed and the non-compliance eliminated, the audit process comes to a natural end. If further problems are found in the follow up, the management takes more corrective measures and schedules another audit and follow-up.

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Improving the Efficiency of the Internal Audit Process with GRC

The Predict360 audit management solutions is a cloud-based GRC tool which helps your business improve and streamline the audit process? It helps your business manage the complete audit life-cycle – from planning to follow-ups. Get in touch with our team to find out how the audit solution can help your business achieve its efficiency and budget goals.