The concept of the Internal Audit (IA) has been around for centuries and can take many forms, depending on the business. While most businesses utilize the IA function as merely a compliance task – checking the box or to comply with the standards of Sarbanes Oxley or some other regulatory agency- many businesses overlook the value in developing an innovative IA function that not only addresses their compliance needs but also provides value to the bottom line of the business. This value can be found in areas that are often overlooked by the IA function including operations, administration and information technology (IT) areas.
Whether you outsource or have an internal group performing your IA function, the results will only be as good as the people driving the innovation and change. Technology has enhanced the capabilities of an internal audit allowing businesses to do more with less. Below we have identified 3 tools that can be a driving force in your IA plan.
- Data Analytics and Mining
Today’s data analytic tools give your IA function the ability to analyze a significant amount of data, and in some cases 100% of the population in minutes. Simple IA functions such as searching for duplicate payments, identifying stringing of credit card purchases, comparing payroll related expenses with fringe benefits are just a few of the simple functions that can be quickly completed and can add value to your business. In addition, data can be analyzed and mined to provide operational feedback for departments, segments and many other components of the business. Benchmarking data provides a great tool that can also be generated through the IA function and the results provided to various members of management for review of the outlier data.
- Cyber Security
IT continues to be one of the highest risk areas for many business entities regardless of the industry type. From smart-phones to computers and complex cloud services to systems that store both financial, operational and customers’ personal data, the risk of breach should always be a top concern for businesses. Often times outsourcing this cyber security IA function is an effective way to mitigate the risk and provide the IA function with an innovative team that has significant experience with various types of businesses and IT platforms. Cyber security and its risk change daily and it is important to have on your team, individuals who have knowledge, experience, and the credentials to help design an effective IA game plan for the organization.
- Operational Components
The IA function, if designed properly can play a key role in improving the operational side of the business. Many operational functions can be bench marked and compared from a business cycle to another similar business cycle or peers to learn where improvements can be made. In addition, often certain components that are manual in the operational function can be replaced using new advance technology if properly identified during the process. Understanding your business operations and designing an IA function that can help improve them can be achieved with the proper skill and innovation in the IA function.
Outsourcing vs Internal
Many Companies struggle with the concept of whether to have their own IA group as employees of the organization or to outsource the function. Depending on the size of your operations, or if you do not have an IA function currently, the consideration should be given to partnering with an outside resource with experience in your industry to contract a few projects. If you currently have an your own staff for the IA function, you may consider revisiting their credentials and background to make sure they are staying current with the technological changes that we are seeing on a daily basis. If your team is not using data analytic software or performing cyber security assessments, then consideration should be given to outsourcing a portion of this function and/or obtain additional training to get your IA function up to speed on the latest changes. An advantage to outsourcing all or a part of a function include having a fresh and innovative team involved that has seen other similar types of business organizations and best practices. Often times teams can be changed up based upon the skill set needed for the engagement, thus increasing the strength of the team depending on the project.
The bottom line, having a dynamic and innovative IA function, if designed correctly is an effective way to not only address compliance tasks but to also add to the bottom line and efficiency of the business. If you have an IA function keep the team fresh and consider the need for outside resources for specific projects.
If you need assistance in these areas or would like to start a new IA project, please contact us today.