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Internal Auditing Best Practices
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nal auditing departments to groom new managers for senior-level positions. This
is an excellent approach, for not only does it give auditors a wide-ranging view of
company operations, but it also allows the managers of functions being audited to
see them and to provide feedback to the human resources department regarding
the wisdom of promoting them to more senior positions. Another problem is that
outside auditors will sometimes assign junior staff personnel to internal audits,
which allows them to charge less per hour. However, these junior personnel fre-
quently have less experience than the internal auditors, and no experience with
specific details of company operations, making them doubly inefficient. Conse-
quently, one must carefully weigh the advantages and disadvantages of this
approach before handing over the internal audit department to a supplier.

Cost: Installation time:

15–13 SCHEDULE SOME INTERNAL AUDITS
ON A JUST-IN-TIME BASIS
A very common management practice is to create a schedule of all internal audits
to be performed for the upcoming year. This allows the audit manager to arrange
for meetings with local managers well in advance, as well as to determine the
logistics of shifting auditors around the world to various company locations. It is
also a common measurement tool, whereby the audit manager commits to com-
pleting a certain number of audits; subsequently, finishing all work listed on the
annual schedule is used as the baseline measure of success. Unfortunately, block-
ing out the entire audit staff’s time for a year in advance also leaves no room for
audits that are requested on short notice, which typically arises when an emer-
gency with control issues arises. Addressing these needs calls for a substantial
reshuffling of the audit schedule.
A fine alternative is to schedule only a portion of the internal audit team’s time,
perhaps two-thirds, leaving the remaining time slots open. By doing so, any short-
term work requests can be dealt with promptly. Not only does this give company
managers the impression that the internal audit department is more responsive to
their needs, but it also eliminates the need for sudden schedule changes. The only
problem with this approach is that one can no longer determine the success of the
internal audit department based on its ability to complete a planned set of audits.
Cost: Installation time:

15–14 SCHEDULE INTERNAL AUDITS BASED ON RISK

The scheduling of various areas within a company for internal audits is usually an
arcane process, involving pressure from the audit committee to have a few “pet”