Internal Audit Planning and Preparation

We do receive a lot of questions about the difference between an internal and external audit. This difference all starts at the planning and preparation stage.

What’s Different When It Comes to Internal Audit Planning and Preparation?

If you are an internal auditor now is the time to keep reading.

The first step in internal audit planning and preparation is the Document Review. I always think of the document review as your homework. This is your preparation for the audit. You are ensuring that you understand what your business says they do.

As an internal auditor already working for the business you more than likely have an understanding or familiarity with the procedures of the business and in particular the scope of the audit that you are preparing for. This is great; however, this doesn’t mean you can skip this step. It is still really important for you to review

the procedures relevant to the scope of the internal audit that you are going to conduct. By conducting this review, you then prepare yourself fully for the audit interview and also generate the output to the next stage – which is developing the internal audit checklist of questions.

This leads to the second step in internal audit planning and preparation which is the Audit Checklist. This checklist of questions is the output from your document review.

As you are reviewing the relevant documentation (records, procedures, forms, etc) you can create a checklist of questions or areas that you would like the auditee to show you or demonstrate to you. This checklist is created so that you can follow a path and have the auditee demonstrate to you that they actually do what they say they do.

A great option as an internal auditor could be to print out the relevant procedure/s and highlight or underline the sections that you need to follow up during the audit. This can serve as your checklist just the same.

Whatever method you choose, you should complete this step of the internal audit preparation with an output of questions and follow-ups ready to refer to for the audit interview.

The final step in the internal audit planning and preparation is the Audit Plan and Timetable. In an external audit, this can be quite a formal process with a formal timetable documented accompanied by a formal audit plan on another one-pager. This does not need to be quite as formal for an internal audit.

For an internal audit, this can be done very simply with an email. You could just send an email to the auditee or audit contact and include:

• the date and time that the internal audit is scheduled for
• how long the audit will take (e.g., 3 hours or it will conclude at X time)
• what areas you will be covering during the audit (physical locations or processes or both)
• ask whether any PPE is required
• ask whether there is anything that you should know prior to the audit

You can see that this is just opening the lines of communication and giving the auditee the opportunity to ask any further questions or provide any required information prior to the audit commencing. 

If you work for a small business and there is a regular meeting conducted with all team members, another option to confirm the internal audit might be at these meetings? You could confirm all of the above points, they would be minuted and agreed upon during the meeting. This makes the process truly relevant to the size and current processes of the business.

It’s up to you to decide on the most relevant process to follow, however, you can see that it does not need to be formal, just real!

In the next article, I will discuss the internal audit requirements for the audit activities and see how they compare to an external audit, so keep an eye out for that!

If you do have any questions about internal audit planning and preparation or auditing in general, please let me know. I’m only too happy to help you out.