Accounting Best Practices, Fifth Edition

Chapter 15. Internal Auditing Best Practices

A traditional internal auditing department is frequently considered to be similar to the external auditors who annually review the corporate financial records, except that they also deal with operational and control issues and are more frequently found in the field. Since internal auditors are commonly hired from external audit firms, it is no surprise that they are likely to bring their old work habits with them and conduct the reviews just noted. However, as is pointed out many times in this chapter, the internal auditor’s role can be viewed quite differently, switching from a systems reviewer to an active partner who can bring tremendous value to a company’s business units. Thus, many of the best practices noted in this chapter focus on the revised role of auditors acting as business partners.

Another strong focus in this chapter is on the enhancement of work efficiencies within the internal audit department, which tends to suffer from continual deadline crises, unfinished paperwork, and difficulty determining which audits need to be addressed first. Examples of recommended changes involve the use of workflow software to centralize paperwork-related issues, shifting some tasks to business unit employees, and creating an auditor skills matrix.

This chapter begins with an overview of implementation issues for all of the internal auditing best practices, followed by a discussion of individual best practices, each one being presented ...