Home – How audits help companies avoid risk management angst

How audits help companies avoid risk management angst

Posted on 05-07-2019 by Lisa Thompson

 Many people cringe when they hear the word ‘audit’ because it is almost inextricably linked with ‘tax’—another cringe-worthy topic. Admittedly, audits can be uncomfortable; very few people enjoy time spent under a microscope. But as the Institute of Internal Auditors (IIA) points out, internal audits represent important links in the chain of comprehensive risk mitigation.

Since May is International Internal Audit Awareness Month, we’re taking a closer look at how this misunderstood and oft-maligned profession delivers big benefits to companies.

What does an internal auditor do?

The Institute of Internal Auditors (IIA) offers this description: “At its simplest, internal auditing involves identifying the risks that could keep an organization from achieving its goals, making sure the organization’s leaders know about these risks, and proactively recommending improvements to help reduce the risks.”

Internal auditors typically report directly to the “highest governing body” of an organization, ensuring that they have the authority to drive change, when needed.

Internal auditors aren’t boring bean-counters, either. While ensuring the accuracy of financial statements is one aspect of the job, internal auditors wear many hats:

  • The Neutral Assessor—Because internal auditing is an independent function, internal auditors are able to evaluate risks the company faces, along with the controls in place to mitigate those risks, without bias.
  • The Trusted Advisor—Internal auditors bring together a comprehensive perspective of a company with expertise in operational controls, risk management and good governance. This means they function as a strategic consultant across many areas of business.
  • The Efficiency Expert—Internal auditors stay on top of organizational objectives, including the all-important goal of the business running as efficiently and effectively as possible. By reviewing processes and analyzing the results delivered by those processes, internal auditors can identify barriers or gaps that result in less-than-optimal results.
  • The Corporate Conscience—Internal auditors abide by a code of ethics that emphasizes integrity, objectivity, confidentiality and competency, says the IIA. And they don’t just talk the talk—in tackling the issue of risk and compliance across the organization, internal auditors are ideally positioned to identify noncompliance with ethical standards, just as they do based on regulatory standards.
  • The Consummate Communicator—Internal auditors aren’t merely watchdogs for an organization; they make recommendations based on their findings. This means they need excellent communication skills to deliver reports that clearly define the potential risks—and opportunities—a company faces, as well as supporting communications that encourage adherence to recommended actions when problems are identified.

Make the most of your internal auditor

Since we’re celebrating International Internal Audits Awareness Month, May is the perfect time for risk management professionals to reach out to internal auditors.

After all, you’re on the same team.

Instead of feeling threatened or nervous about an audit of your third-party risk management processes, embrace the internal auditor’s expertise.

An internal auditor’s understanding of the big picture can help you optimize your due diligence and ongoing risk monitoring to better protect against reputational, regulatory, financial or strategic risks. In the long run, better results yield advantages for the business—and your professional reputation. Sounds like a win-win situation, doesn’t it?

Take Action

  1. Get our eBook on the ethical expectations companies face and how robust risk management helps meet those standards.
  2. Find out why experts recommend on-going risk monitoring  as a complement to traditional due diligence. 
  3. Share this post with your colleagues and connections on LinkedIn.

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