It is a powerful diagnostic tool for understanding organisational health, in all in its manifestations
In this day and age, most domains are under a state of transformation. That being so, there is a need to re-examine, and if need be, re-invent the relevance of each area of concern. This applies to the subject area of audit as well. Audit can no longer to be focused exclusively on internal financial controls or statutory checks or external financial dealings.
Audit, especially internal audit, is among other things a powerful diagnostic tool for understanding organisational health, in all in its manifestations. It covers the entire gamut of organisational activities beginning with compliances, relationships with Board Directors, an evaluation against key performance indicators to actively adding value to organisational processes. It is arguable that audit or internal audit process must, by definition, concern itself with risk management and governance systems of the originations.
Predictably this will impact the overall articulation and architecture of the audit process. One of the outcomes will be flexible risk-based audit plans.
The internal audit must operate from a value which has the touchstone of a purposeful focus. Indeed, the audit committee cannot function without adequate communication and relationship with all the key stake holders and their priorities.
It is a positive input that the international internal audit systems have developed internal standards for the professional practice of internal auditing, and it is mandatory by its very nature. To make the operationalisation of standards come alive, there must be the will and competency to operate them and make them durable.
like any other area, internal audit requires talented people. They have to be adequately developed and retained. This puts the competency to train for internal audit operations at the core of the activity. The practitioner of internal audit must know the principles to analyse the data and assess the appropriateness of the results he or she obtains. This will help the organisation analyse performances across the audit parameters and take corrective action as appropriate.
Typically the internal auditor reports to senior management. As against this, if audits are conducted by external organisations, there are external auditors, and often they have a statutory obligation. These external auditors have their work open to review and scrutiny by the company management and the shareholders. In certain cases, external auditors can apply their own independent audit mechanism. An obvious area of their work is to certify that financial statements of the organisation give a true and fair view of the firm’s state of affairs, in accordance with the financial reporting framework.
As noted above, the internal audit determines the operational efficiency and the appropriateness of resource management of the firm. In many cases, special attention is given to verification of cost records and adherence to acceptable cost accounting procedures.
Thus, audits could cover the performance of safety, security and information systems and much more.As newer areas, come under the ambit of the audit process, domains such as energy audit, organisational health check audit, audit and assessment of current state of projects to ensure project success, are some of the areas where internal audit has been found useful.
The average time taken from the staff accountant’s position to a partner’s status can be around 15 years. Obviously this cannot be taken as a rigid framework. Roles at each level of the hierarchy can and do vary
Conducting the auditprocess, among other things, require observation skills, communication skills, skills of sales, marketing and of course, ethics. The other competencies are domain knowledge, technical experiences, reading, comprehension, active listening, analytical skills, open-mindedness and, inevitably, managerial skills. All in all, it will be ffair to assume that the audit process is central to understanding what is happening to the organisation.
For keeping this understanding relevant, organisational audit is needed. What is also needed is an imaginative scenario building for the future. The auditors should be prepared not only for today but also for tomorrow. Auditor are critical for not only keeping the organisation going but to prepare it for the future. Audit, especially internal audit, is truly a strategic function.