10 tips for successful internal audits

Why should you conduct an internal audit?Copied

Internal audits are inspections or assessments conducted within an organization to determine how well or reliably its operational processes and procedures are working. ^[1] As their name implies, they are performed by someone employed within your organization.

Internal audits typically focus on one or more processes, and as such require a systematic, structured, and disciplined approach.

Internal audits are beneficial for several reasons:

• The insights that internal audits generate allow you to easily identify areas for improvement
• Using this information, you can pinpoint the root causes of any operational and strategic problems, then take steps to alleviate them
• They can help you reduce operational costs and improve efficiency
• You can demonstrate a commitment to improving quality, health, safety, and sustainability within your organization

You can learn more about how internal audits work – and how they can benefit your organization – in our blog post on the subject.

External audits vs. internal auditsCopied

The difference between an external audit and an internal audit is simple. An internal audit is conducted by a person or team within your organization. An external audit is conducted by a third party or external organization.

• The goal of an internal audit is to improve processes or operations
• The goal of an external audit is to ensure that your organization and its processes is adhering to regulations, standards, or other laws or rules

How often should internal audits be performed?Copied

You should regularly conduct internal audits. Exactly how often depends on the type or complexity and age of the process or system you are auditing. ^[2]

• You should audit new, highly complex processes more often – potentially quarterly or twice a year
• Processes that are less complex, or that are already established and trusted, can be audited less frequently – yearly or every other year
• Should your audit turn up a major issue or problem, it’s a wise idea to conduct another audit of that process sooner rather than later, to ensure the problem does not reoccur
• Regulatory requirements are another factor that affects how often you conduct an internal audit. Some regulations or standards may require you to conduct an internal audit within a specified timeframe in order to stay compliant

10 tips for successful internal auditsCopied

Internal audits should be more than just a quick quality control check. If implemented effectively, they will serve as a powerful tool for continuous improvement. You can take advantage of the following 10 tips to successfully conduct your next internal audit.

1. Set clear goals

The clearer the objectives of your internal audit, the more effective it will be. ^[3]

To set clear goals for your internal audit, ask yourself the following questions:

• What am I going to do?
• Why am I conducting this internal audit?
• What risks does the audit address?
• Was this process audited in the past? If so, what were the results?
• Am I looking to improve processes, mitigate risks, or cut costs?
• Has the process I am auditing changed recently or since the last audit?
• What needs to happen for the audit to be a success?

2. Create support and establish authority

Effective internal auditing relies on buy-in throughout your organization, from senior management to the shop floor. One way to achieve this is to appoint an auditor with sufficient expertise or authority. This person should be very familiar with the process being audited and possess the necessary soft skills to work and communicate well with others.

3. Prioritize

Internal audits often involve sifting through a great deal of information. This mean it’s important to set priorities. Determine which process components or risks demand your immediate attention based on the audit’s objectives.

4. Ask – and answer – the right questions

A successful internal audit that you ask and answer the right questions. Here, you can follow the “five Cs” of internal audits. ^[4]  You should consider the five Cs before you conduct your audit. Additionally, you should include all the answers to the questions they pose in your post-audit report.

The five Cs of internal audits are:

• Criteria. What standards or benchmarks were used to assess your processes?
• Condition. What is the current state or situation being evaluated, both before and after the audit?
• Cause. What was the reason or source of any identified issues?
• Consequence. What are the results or impacts from these issues?
• Corrective action. What steps have you taken – or will you take – to rectify or improve these issues?

5. Identify stakeholders

Determine the stakeholders involved in the internal audit before you begin. Who you involve depends on the scope of your audit. If it will encompass your entire organization, you must involve multiple teams, departments, and sites. However, if your audit is smaller scale, you may only need a select few individuals.

6. Be appreciative and constructive

Use your internal audit as an opportunity for growth and improvement, rather than a rigid exam or inspection. Encourage your employees to provide input on what is going well, rather than solely focusing on potential problems or issues. This will allow you to develop a clear picture of exactly how to change and improve specific processes.

7. Adopt the right tone

Should your audit uncover an issue or problem, be sure to approach it constructively. Focus on the solution to the problem rather than the problem itself. This will allow your employees and teams to work to resolve issues more quickly and effectively.

8. Formulate suggestions for improvement in context

Create a plan for improvement based on clear evidence and demonstrable findings – and in such a way that staff recognize and identify with the context. This will ensure that everyone is objectively working toward the same goal.

9. Conduct targeted internal audits

Internal audits often have a wide scope. The common tendency is to try and cover as many bases as possible. However, if your internal audit is too broad, it may lack substance or depth.

You can avoid this by designing an audit that targets specific areas of your operations or processes. ^[5] These could include areas could include:

• Quality Management Systems (QMS)
• Regulatory compliance
• Documentation and record-keeping
• Employee training and qualification
• Process validation
• Risk management
• Product quality

 10. Use the right tools

When you use the right tools for conducting your internal audits, you’ll be able to conduct them much more efficiently and effectively.

For example, AG5’s skills management software provides your internal auditors with all the information they will need  – such as your employees’ skills, duties, qualifications, and certifications – on an intuitive, centralized platform.

Can internal audits be outsourced?Copied

While you can outsource an internal audit, research and consulting firm Gartner does not recommend doing so ^[7] This is because it takes a great deal of work on your organization’s end to prepare for an external organization coming in to conduct an audit.

Outsourcing internal audits is risky because:

• You’ll have to spend time finding the right company to conduct the audit
• You will have to ensure that your sensitive information is protected
• There won’t be as much of a focus on ensuring that all aspects of your business are working well together, but instead only on the specific area of the audit

Using your own teams for an internal audit is beneficial because they are often more:

• Reliable
• Sustainable
• Cheaper
• Better aligned with organizational goals

How much does it cost?Copied

The cost of an internal audit is not necessarily always high. Research from CFO Magazine ^[6], for example, shows that “cost-efficient” companies spend “[USD] 40 cents or less per $1,000 in revenue.”

Such a low figure greatly increases the value of an internal audit, especially considering that they improve an organization’s changes of successfully passing external audits.

To become cost-efficient, however, you’ll need an effective skills management strategy – especially if your organization employs many highly skilled individuals.

Nail your internal audits with AG5 skills management softwareCopied

AG5 provides you the platform on which to develop such a skills management strategy. You can use our skills management software to find suitable auditors, for example, as well as provide them with the tools and information they need to conduct an internal audit.

With AG5, you can:

• Enjoy an easy-to-understand overview of all the skills, certifications, and qualifications your employees possess – and those they need
• Edit and update this information anytime, anywhere
• Create visually appealing skills matrices yourself, in less than a minute
• Share skills matrices with any co-workers you want
• Slice and dice your data any way you need
• Say goodbye to all your version management headaches
• And much more

Ready to see it in action? Schedule a free, live, 15-minute demo for a customized look at how AG5 can help you conduct an internal audit.

Author Copied

Rick van Echtelt

Rick van Echtelt is the Co-Founder and CEO of AG5, where he leverages over two decades of experience in entrepreneurship and developing skills management software.

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