Why Your Business Needs an Internal Auditor

Every successful business needs to seek out continuous improvement. The best way to ensure this is attained is to perform internal audits. It is certainly worth your while to establish an internal auditor within your business, whatever sector you work in. 

What is an internal auditor?

An internal auditor provides an unbiased view on a company’s internal processes. 

Why does my business need an internal auditor?

An internal auditor carries out a review of day-to-day processes and behaviour. This is vital to a business as it offers insight into whether or not processes are being followed. After all, it’s not uncommon for people to become lax and cut corners in a process they have been doing over and over for a long time. It’s natural for finer details to slip by the wayside. But these can build up and end up impacting the quality of your business. An internal auditor shines a light on this and refreshes the whole process from start to finish. 

Plus, an auditor will flag any potential risks that a current process may be presenting. For example, if a process has been in place for many years, but the inputs have changed in that time, new risks may develop that the established process was not structured to take into account when it was originally put in place. An internal audit can bring this to everyone’s attention for it to be dealt with swiftly. 

How do I appoint an internal auditor?

So long as your staff member has been on a training course and earned the right qualification, anyone can be your internal auditor. For example, if your company needs to meet ISO 9001:2015 requirements, Lloyd’s Register offers a two-day Internal QMS Auditor course. Anyone in your company can take part in this course to attain the relevant qualification to carry out internal audits for you.  Have a look at what courses are available to meet your company’s quality certificate needs. 

How do I plan an internal audit?

Once you have an internal auditor in place, it’s time to plan the audit. The first step is to figure out all of the areas within your business that will need auditing. This could include: 

• Purchasing
  • Purchase invoice process
  • Purchase order process
• Sales
  • Sales invoice process
  • Sales order process
  • Sales quote process
• IT and Security 
• Human Resources
• Accounting
  • Payroll process
  • Expenses process 
• Manufacturing 
  • Preparation of Item A
  • Production of Item A
  • Finish/Quality Control process 
• Shipping
  • Stock process 
  • Shipping process 

It’s important to draw up an auditing calendar too. This will ensure that each department knows when the audit will be happening and can provide the correct documents in the lead-up to it. Here is an example of what it may look like:

How do I perform an internal audit?

The main aspect of an audit is the interview and observation stage. The internal auditor must read the process as it should be performed, then observe an employee carrying out the task at they would day-to-day. The auditor will ask questions surrounding the usual way the procedure is carried out. This helps to highlight any shortcomings or risks during the process. 

The internal auditor will take notes during the audit ready to write up a report afterwards. 

What do I do with the results of an internal audit? 

With the results of the audit, the internal auditor can then write up a report. The report will highlight any areas of concern, as well as flagging risks. These reports are usually given to the head of the department audited. The level of detail the report goes into is down to the internal auditor. And example of a report could be: 

If needed, a Non-Conformance Report may also need to be raised alongside the audit findings. Any issues with non-compliance or risk can then lead on to an Action Plan being drawn up. 

Working alongside the head of department with the report findings, the internal auditor will help to create an Action Plan. An example of this is given below by HTL group, experts of controlled bolting: 

It is expected that the head of department will take ownership in ensuring that the flagged issue is dealt with, and the process amended if need be. Any additional training to employees carrying out the task is also left to the respective departments to handle. It is also good practice for the internal auditor to set a date to review the Action Plan in the future, to make sure that the agreed upon measures are being carried out. 

The process of internal auditing can be a huge benefit to an organisation. It is certainly not something that should be treated as optional! Enlist an internal auditor into your team today and find out just how well your processes are working for you. 

Sources

• https://thethrivingsmallbusiness.com/internal-audit-process/
• https://www.accaglobal.com/an/en/member/sectors/internal-audit/learn/brief-guide.html
• https://www.iia.org.uk/about-us/what-is-internal-audit/