Accounting Best Practices, Fifth Edition

15–13. Schedule Some Internal Audits on a Just-in-Time Basis

A very common management practice is to create a schedule of all internal audits to be performed for the upcoming year. This allows the audit manager to arrange for meetings with local managers well in advance, as well as to determine the logistics of shifting auditors around the world to various company locations. It is also a common measurement tool, whereby the audit manager commits to completing a certain number of audits; subsequently, finishing all work listed on the annual schedule is used as the baseline measure of success. Unfortunately, blocking out the entire audit staff’s time for a year in advance also leaves no room for audits that are requested on short notice, which typically occurs when a control emergency arises. Addressing these needs calls for a substantial reshuffling of the audit schedule.

A fine alternative is to schedule only a portion of the internal audit team’s time, perhaps two-thirds, leaving the remaining time slots open. By doing so, any short-term work requests can be dealt with promptly. Not only does this give company managers the impression that the internal audit department is more responsive to their needs, but it also eliminates the need for sudden schedule changes. The only problem with this approach is that one can no longer determine the success of the internal audit department ...