Accounting Best Practices, Fifth Edition

15–2. Issue Self-Audit Guides to Business Units

Many of the best practices noted in this chapter involve the conversion of the internal audit staff from reviewers of controls to advisors who impart knowledge about business improvements. However, this shift in emphasis means that the traditional task of reviewing controls will be done much less frequently.

An alternative is to shift some of the controls review burden to the business units themselves. Though this may seem like a case of having the fox guard the henhouse, the internal audit department can still monitor business unit results at a high level to see if general operational and financial performance measures indicate a problem, and then send in a team to conduct a thorough review. In most cases, there are no serious control breakdowns, so audit tasks with lower-risk profiles can be safely assigned to business unit employees. By doing so, there is greater likelihood of audits being conducted on a regular basis, and by people who are thoroughly familiar at a detailed level with business processes, which may result in better audit work.

To make this shift of responsibilities a success, the internal audit department should construct a series of self-audit guides for the business units. These guides should briefly explain a control objective, note how specific controls are used within a process to meet that objective, and then lay out detailed auditing steps for employees to follow. The level of detail in these guides should ...