Internal audit for government companies is crucial for overseeing governance, risk management, and compliance processes. It ensures checks and balances, monitoring public entities to prevent emerging risks.
This article explores seven strategies for optimising internal audit for government companies.
Planning for success: Government internal audit
Internal audit is how organisations evaluate their internal controls, including governance and accounting processes. Its importance has increased for government departments significantly in recent years as the public is increasingly interested in how taxpayer monies are spent.
Internal audits ensure compliance with regulations, support efficient operations, and enable accurate data gathering and reporting, whether financial, ESG, or other data.
As a result, they can also help your senior leaders and management. Internal audits identify issues before external audits, enhancing operational efficiency by spotting potential improvements.
What is the purpose of internal audit for government companies?
An internal audit is your first line of defense against poor processes, controls, non-compliance, and corruption, ensuring a clean audit. But the benefits of a robust internal audit management process go beyond tick-box compliance.
Good internal audit management can also assess and recommend improvements to government culture, which is vital to a compliant organisation. According to The IIA’s IPPF, internal auditing is an independent, objective activity aiming to add value and improve operations. It helps government organisations by systematically evaluating and enhancing risk management, control, and governance processes
And there are further benefits. Aligning internal audits with your strategy turns compliance into an opportunity for organisational improvement.
This way, internal audit management enhances DEI performance, organisational agility, and other imperatives.
Internal audits can play a central role in achieving your ESG strategy. It bolsters an integrated risk management strategy by safeguarding against threats like fraud and cyberattacks. By adopting best practices, the internal audit team can shift from compliance practitioners to making a genuine impact on the organisation.
An internal audit can be more comprehensive than an external audit, covering a broader range of controls and risks. In an ideal world, your internal auditor checks processes, suggests improvements, and aids your government organisation’s evolution.
Exploring best practice internal audit management processes
Achieving this demands that you put in place some best practice approaches to internal audit management. We’ve developed seven best-practice internal audit management strategies to help you.
1. Failing to plan is planning to fail
Preparing effectively for an internal audit is vital; it will help get buy-in for the process, ensure deadlines are met, and facilitate the availability of all the data you need to conduct the audit.
Explain the audit process to the team or government department you’re auditing. Don’t forget to convey the benefits of the audit; it’s a process designed to benefit them, not just to fulfil a governance need. Talk about increased efficiency, better methods, and the opportunity to be prepared for an external audit.
Establish a core team, communicate the scope of the audit, and share details of the data you will need and the systems you will want to access. Carrying out a preliminary risk assessment will help you with this last point.
These steps will help reassure those you’re auditing and ensure you have everything you need to complete the audit.
2. Engage with the organisation you’re auditing
We touched on this in point one, but it can’t be overstated. Turning up once a year, with little forewarning, auditing a department and disappearing for another 12 months does not help build the necessary bridges between internal audit and the rest of the organisation.
Communicate frequently, explain your objectives to the audited team, and discuss findings, next steps, and outcomes to ensure everyone involved understands the benefit of the internal audit process.
3. Identifying key controls in government internal audit
Your risk assessment will enable you to pinpoint significant risks and the controls that manage them. Whether this means testing your organisation’s zero trust architecture or other IT risk management strategy, measuring your sustainability practices, examining financial controls, or something else specific to your organisation, identifying key risks and their controls is the next essential step in the internal audit management process.
4. Test out those controls
During the fieldwork phase, when you are out in the organisation, you gather the information you need on controls, measurement and all the evidence you need to support your issues. Capture your findings in writing to build a compliant audit trail. And keep communicating with your internal audit “clients” so everyone knows your objectives and actions.
5. Be proactive in reporting
The audit report is the output of the internal audit process. Best practice internal audit management makes the collation of this report an integral part of your fieldwork. Don’t wait until you’re finished with your data-gathering to start writing the report; you may forget or miss the crucial details or nuances that inform a rounded audit report.
It’s also an idea to share some of your findings during fieldwork status updates as you write them up; this gives audited teams and other internal stakeholders an insight into what’s coming in the final report and can prevent unpleasant surprises.
6. Take a more agile approach
Internal audit management has traditionally been rigid, with set deadlines and parameters. Introducing an element of agility has shown to engage all stakeholders in a way that a once-a-year audit cannot.
Position the internal audit management team as partners who act to help the organisation’s teams continuously improve their risk management processes without providing management advice. This will help you to gain the respect and support of the team you’re auditing and convey that you are all working towards the same end.
7. Unlock the potential of government internal audit
Streamlining and upgrading internal audit for government companies is possible with the use of internal audit management software. Implementing a software-based approach can have huge benefits if you want to turn the audit process into an intrinsic part of your organisational strategy.
Automated workflows speed the internal audit process and, at the same time, minimise the potential for human error or omission. The outputs are “board-ready” or “audit committee-ready”, moving beyond data to insights that inform executive decision-making.
And internal audit management software is improving all the time. While the first generation of automation advanced internal audit hugely, it had its limitations which, at times, introduced new challenges, like the emergence of “dark data” that could not be analysed or shared. Today’s intuitive audit management software overrides these issues, enabling internal audit teams to access and interrogate 100% of their data.
Explore the benefits of internal audit management software
These seven steps will help accelerate your internal audit management process from compliance to strategic advantage. The one that can deliver the fastest results is adopting internal audit management software.
Modernising your approach to internal audit smooths the process. It enhances outputs, propelling your internal audit team to a source of knowledge status by enabling you to deliver actionable audit insights.
Learn more about how our internal audit management software can help you efficiently and effortlessly manage the internal audit process.