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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 fre-
quently found in the field. Since internal auditors are commonly hired from exter-
nal 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 efficien-
cies 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 prac-
tices, each one being presented in a separate section. The chapter finishes with a
review of how these best practices will change a company’s internal auditing
operations.

IMPLEMENTATION ISSUES FOR INTERNAL AUDITING
BEST PRACTICES

Implementing most of the best practices in this chapter require very little money,
since they largely involve procedural or management changes that are internal to
the department. The cost and installation time required for all the best practices in
this chapter are noted in Exhibit 15.1. However, a number of the best practices
require a modest investment of time, such as performing annual internal control
assessments, creating self-audit guides, and training business unit employees on
training issues. Thus, implementing these best practices will require detailed
management by the internal audit manager to see when auditor time can be made
available to complete the various work items.

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