Page 324 - Accounting Best Practices

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15–6 Train New Business Unit Managers on Control Issues
15–5 TRAIN BUSINESS UNIT STAFF ON 313
CONTROL ISSUES
Many control problems arise because employees do not understand the impact of
the improper usage of a control. They simply see it as an extra step to be followed
or an inefficiency that can be overcome by altering the process. When internal
auditors spot this type of problem, they usually report it to management, which
must somehow find the time and resources to train the employees in the proper
use of the control. Since this training is not budgeted, it frequently does not
occur, resulting in continuing control problems.
The internal auditor can mitigate this problem by setting aside time at the end
of each audit to personally provide the necessary level of training. This will require
extra time, so some padding must be added to the audit time budget to allow for
employee training. Also, it is most helpful for the internal audit department to have
a set of training guides on major topical areas prepared in advance, and readily
accessible by all auditors for use. These guides should cover processes and controls
in all major areas that are common to multiple business units, such as inventory
transactions, order fulfillment, the purchasing process, and travel expense report-
ing. Though this best practice will require more auditor time than is usually the
case, it helps to reduce the number of control problems that will be found during
subsequent audits, and so saves audit time in the long run. It is also seen as a major
benefit provided by the internal audit staff to the rest of the company.
Cost: Installation time:

15–6 TRAIN NEW BUSINESS UNIT MANAGERS ON
CONTROL ISSUES

When new managers are assigned to a business unit, the last thing they want to
see is an internal auditor walking in the door to conduct a review. Their experi-
ence is likely to be the uncovering of some shortfall in the control systems, result-
ing in a black mark against them while they are still struggling to learn the details
of their jobs. In anticipation of this result, a new manager is likely to stonewall an
internal auditor as much as possible in hopes of avoiding any negative findings.
A much more positive approach is for a senior-level internal auditor to meet
with each new manager as part of the initial job training and spend a great deal of
time discussing the control systems over which the manager now has responsibility.
This discussion should include a hands-on review of each process step where
control points are used, as well as conversations about the need for these controls,
how to ensure that they are being followed, and indicators of control failures. The
internal auditor can even point out other possible improvements in the manager’s
systems. By taking this approach, the internal auditor will be seen as a strong