As the risk management landscape increasingly evolves and becomes more complex, internal audit engagements will play a critical part in safeguarding and strengthening this framework. To excel in this role, internal auditors will need to embrace comprehensive strategies that include detailed risk assessments, adopting digital technologies, stakeholder engagement, and effective communication. These are just a few of the key strategies discussed in Fieldguide’s Internal Audit Best Practices: Elevating Risk Management and Operational Excellence eGuide.
Read on for a snapshot of key best practices for elevating risk management.
Three Lines Model of Assurance
The Three Lines Model is a governance and risk management framework that provides a structured approach toward managing and overseeing organizational risks. It helps organizations meet their objectives by clearly defining roles and responsibilities at various levels, thus adding clarity and accountability. It makes sure that various stakeholders in risk management realize their roles and thus promotes accountability through distinct lines of defense.
Those three lines of defense are: operational management, risk management and compliance, and internal audit. Implementing the Three Lines Model enhances risk awareness across the organization, promotes a culture of proactive risk management and encourages employee accountability and ownership of risks within their areas. By improving the organization’s ability to withstand and recover from adverse events, the model strengthens overall organizational resilience through robust risk management practices.
Internal Audit as the Third Line of Defense
Internal Audit plays a critical role in the Three Lines Model by offering an objective evaluation of the organization's risk management and control processes. Eight key practices include:
- Comprehensive risk assessment. Auditors must adopt a meticulous approach to identifying, prioritizing and mitigating potential risks.
- Developing a detailed audit plan. A meticulously crafted timeline sets key milestones and deadlines, which in turn facilitates effective time management and comprehensive coverage of audit areas.
- Utilizing a structured approach. This approach encompasses four main stages: planning, executing, reporting, and follow-up. Adopting a consistent methodology not only streamlines the audit process but also enhances its credibility and the value it delivers to the organization.
- Facilitating effective communication. Ensuring open lines of communication with auditees throughout the audit process enables transparency and collaboration. It keeps all stakeholders informed and helps quickly identify potential issues. Software tools like Fieldguide are instrumental in keeping all communication in one central place for seamless and effective communication during internal audit.
- Strengthen stakeholder engagement. Engaging stakeholders early on in the audit process is critical in order to discover and understand their needs and expectations. To do that effectively it’s important to make communicating as efficient and collaborative as possible. How do you do that? Through software like Fieldguide which centralizes and keeps the most up-to-date information all in one central location. This means each stakeholder has access to the same audit documentation, findings and reports - no more miscommunication due to disparate data sources.
- Leverage AI-powered, end-to-end technology. An AI-powered audit management solution, like Fieldguide, streamlines workflows, automates tasks and improves audit accuracy. By using audit management software to harness data and unlock deeper insights, auditors can quickly identify bottlenecks, improve collaboration and communication with disparate stakeholders. AI software also enables auditors to see how much time is spent on specific processes and engagements and identify areas where time and resources are being wasted.
- Foster continuous improvement. Staying ahead of industry trends and new regulations, regularly evaluating audit processes and seeking feedback, are just a few of the ways to foster continuous improvement that will guarantee improved audit effectiveness.
- Implement effective follow-up and monitoring. A robust follow-up and monitoring process is key to identifying and preventing recurring issues; it provides a feedback loop between auditors and stakeholders for greater collaboration and alignment; and, follow-up validates the credibility of audit recommendations.
Global Internal Audit Standards
It’s imperative that every internal auditor is up to date on the newest standards. The new Global Internal Audit Standards, published by The Institute of Internal Auditors, provide essential principles and standards for internal auditing. The standards are structured into five domains: Purpose of Internal Auditing, Ethics and Professionalism, Governing the Internal Audit Function, Managing the Internal Audit Function, and Performing Internal Audit Services. These guidelines ensure effective communication, quality enhancement, and the application of standards in the public sector, taking into account governance, organizational structure, and funding constraints.
Want to learn more about how you can successfully elevate your internal audit engagements and drive operational excellence in this ever evolving landscape? Download your free Internal Audit Best Practices: Elevating Risk Management and Operational Excellence eGuide.
