Olvia Pitts

Internal Audit Planning: The Key to a Successful Audit Program

By Olivia Pitts
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Olvia Pitts

Taking time to plan is a crucial step in the internal auditing process. Without sufficient planning, audits can often encounter roadblocks that lead to lackluster results. This article provides an overview of key planning steps that will help keep audits on track and within scope. The goal is to provide guidance for developing a well-organized internal audit program that will lead to improvements across the organization.

The first step in internal audit planning is to understand the process and the available resources. The format and structure of the internal audit program will vary between organizations. Factors such as company size, culture, and staffing play a significant role in the development of the program structure. Auditing requires time and commitment to be effective. Top management should be involved in this process to ensure there is a clear understanding of the level of commitment needed across the site. This activity can be incorporated into annual strategic planning meetings or through the management review process. Participants should include members of top management and relevant support staff.

Once the team is gathered, discuss the options and identify the preferred structure. This is a great time to discuss needed resources and identify a point person to oversee the program. Though not a standard requirement, identifying someone to manage the program provides high-level visibility of the overall effectiveness. Responsibilities may include oversight of internal audit scheduling, auditor training, and maintenance of records. Having someone dedicated this role will help to ensure that the program is being managed as expected.

Continuing education around the process is vital to ensure everyone is in alignment. This includes education for both top management and plant staff. All employees should be aware of the audit program activities regardless of their level within the organization. Developing a format for driving awareness helps to reduce any fears around participation in audits as an auditee. Individuals who are unaware of the format and structure will often avoid being interviewed for fear of saying the wrong thing. These types of issues can be resolved by sharing the message that internal audits are a way to improve current processes and procedures. They are not intended to be a fault-finding activity but rather a way to grow.

Business is constantly changing thus resulting in events that may impact the internal audit program. A process review is not a one-time activity. Be sure to set aside time, at least annually, to review the overall format and structure of the program. Identify areas that need improvement and celebrate areas of success. Remember the program needs to work for each individual organization. Adapting and changing to fit the needs of the team should be expected, especially in the early days of the internal audit program.

Utilize Auditing Tools

The proper adoption of auditing tools will provide significant benefit across the auditing program. Tools often used in auditing include the sitewide audit schedule, audit plans, and audit checklists. By implementing these tools, the audit program becomes streamlined reducing confusion and driving the program to success.

Audit scheduling is made up of two parts. It includes the overall schedule for the entire organization and the individual audit schedule otherwise known as the audit plan. The sitewide audit schedule should encompass each functional area within the scope of the management system, while the individual audit plan should detail the specific areas being audited. Developing these two documents requires input from the entire management team. This should not be a task that is undertaken alone. Involving team members aids in spreading awareness of the needs and expectations around the audit program. The management team should be provided with clear expectations around the timing needed for each audit. This information not only allows the plant staff to prepare for visitors within their areas but also establishes a collaborative approach to internal auditing. When determining the timing for each of the audits, the team should provide an overview of what processes and records will be reviewed and the number of interviews needed. This information provides an outline for time and resources needed for each audit. Considerations should be made for unexpected delays or the need for special accommodation requirements due to production demands. This may require scheduling during specific times or bringing in additional support staff to support the production lines during the audit. By taking time to review potential issues upfront, the risk of audits being cancelled or delayed is greatly reduced.

For those areas identified as potentially challenging it’s a good idea to build the sitewide schedule so that it allows for flexibility. This may include scheduling higher risk audits earlier in the year to build in more time, or allowing the department manager to provide the preferred audit dates. When developing the schedule be careful not to overload with an extensive number of audits. There should be an adequate balance to avoid potential issues. The auditing structure can be set up in a variety of formats. Some organizations choose to audit by department, while others prefer reviewing by process to capture a cross-functional view. Both formats can be used to confirm conformance to established requirements. Identify the requirements and the records needing review to determine the logical format for the organization. The key is to allow ample time to cover the entire scope of the individual audit. Keep in mind additional time may need to be built into areas that require lengthy transit times to arrive in the audit area.

Once the overall audit schedule has been established, the next step is developing an audit plan. This critical step is often overlooked to save time; however, having an audit plan is the true time saver. It helps to set the framework for the audit and aids the auditor in developing a clear understanding of what needs to be reviewed. A well-developed audit plan will include a timeline, processes being audited, auditee and applicable standard or internal documentation references. By outlining this information, the auditor will develop a clear path for the audit. The audit plan can also be shared with auditees to provide communication around expectations and requirements going into the audit.

The audit checklist is another valuable tool available to the auditor. A checklist should include such details as the scope, objectives, focus area and questions for the auditee. This tool helps the auditor stay focused and remain on track throughout the audit. Once developed, audit checklists can be reused and adapted for future audits. The checklist should be written to focus on the overall process being audited. Be sure to include both standard requirements and requirements related to internal processes and procedures of the organization. A well-developed checklist contains a mix of process specific and high-level management system questions focused on the overall system. The high-level questions can target such areas as quality policy, quality objectives document control and continual improvement. By creating and reviewing the audit checklist prior to the audit the auditor will be prepared and efficiently utilize their time.

Support the Audit Team

The most effective way to support the audit team is to ensure top management finds the audit program beneficial to the organization. Strong support from top management will empower the audit team and encourage them to drive change. When developing a new internal audit program ensure that the top management team is aware of the resources needed to develop the program. Help them to understand the time commitment and explain any disruptions the audits may cause in the daily activities. By communicating this information up front the risk of audits being delayed due to constraints related to management will be significantly reduced. As the program progresses, provide updates on status of the audits and actions implemented. This will help to reinforce the continuous improvement mentality and demonstrate the value of the program.

Holding frequent meetings with the audit team will help to drive the importance of the audit program. It will also help to identify potential issues with scheduling and clarify any misunderstandings. These meetings can also be used to educate auditors about the standard or internal requirements. Limit the meeting to an hour or less to maintain the interest of the audience. As auditors work through the audit process, they may need additional help preparing audit plans and audit checklists. Encourage the team members to work together and learn from each other. Becoming a skilled auditor takes practice. Encourage the audit team at a minimum to participate in audits quarterly. As the team grows, provide feedback on their progress and achievements that have been accomplished. Feedback is crucial in building the confidence of internal auditors and the overall audit program.

Providing communication and awareness to the entire organization around the audit program is an important element of supporting the team. Many employees know little about the program unless directly as a part of their role. Auditing requires an extensive amount of work and time commitment. Often the role is voluntary or an addition to the employee’s current role. It’s imperative that the management team acknowledge the workload required of those asked to conduct and participate in audits. This will provide the auditors and auditees with a sense of appreciation for their efforts, thus resulting in a workforce with a committed focus on continual improvement.

Be Consistent

Developing a strong internal audit program does not happen overnight. Instilling audit planning into the internal audit program will provide organization-wide success. Ensure that the team has a full understanding of the process and encourage the use of auditing tools across the organization. When issues occur be willing to change course and adapt as needed. Internal audit programs are ever changing and will need consistent maintenance to be the most effective. Through the support of top management and the utilization of these valuable concepts a strong foundation can be established. Be consistent and positive results will follow.

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