Enterprises across the globe are investing huge amounts of time and money on stricter internal controls. And they are reaping the rewards. They have changed how they ‘audit’ themselves, not only in practice but in how they perceive the process. Maybe it is time for your company to radically change its internal audits?
To start with, the first question we must ask ourselves is ‘Do we actually explore our internal audits in its entirety?’ Well, it is not just about ticking all the boxes, but to go beyond and think outside the box. To be regulatory ready in an ever evolving business landscape, it is a wise to use the information available to you. Effective internal audits have the potential to provide solutions and value-rich insights. Moving on from simply assessing processing flaws, modern internal auditing poses as a strategic opportunity for every organization to drive innovation and productivity. Findings and results are all well expected, but the ultimate measurement of success for internal audits are the changes that are implemented due to their outcomes.
Making Internal Audits Invincible
Way back in 2015, Japan’s leading conglomerate Toshiba was caught up in a big accounting scandal. One of the early adopters of corporate governance in Japan, the 140-year old company found itself defending its own practices. A good corporate governance structure is not necessarily a path to smooth corporate governance. It was a case of failed internal audits. On paper, the company’s auditing division was responsible to audit its corporate teams, branch companies, and affiliated companies. However, in practice the team provided substantial ‘consultation’ services for the top management. This team did not point out necessary internal control weaknesses prevalent in its accounting team.
In a different case, internal audits revealed severe inconsistency and inaccuracy in data and reporting at Canberra Hospital in Australia. These audits raised serious concerns about patient’s safety and health in the hospital. Thanks to audits, the hospital authorities found lag in action on the collected data and an incumbency that had set-in due to a culture of under-reporting. The main purpose here was to ensure that the objectives set by the senior management and the company’s board are duly met.
These incidents prove that the path to internal audits must be structured intelligently.
Situations change, organizational culture changes; are you well prepared for these changes and understanding how they impact your company?
Internal audits are the guiding light to understand whether the culture the top management wants for their organization is the one that exists in real-time.
To leverage the advantages of internal audits fully- your company needs to understand that there is no ‘one size fits all’ approach. Assess the ‘why’ not just the ‘what’ for such audits to sustain across the organization. Seen as the new ‘lever’ for change, smart and technology based audits represent a huge opportunity to bring the change from laggard practices. Teams deliver and comply, these audits help the organization to move forward with trusted insights. It is inevitable to act fast and prevent from falling behind in the race.
Drive Excellence and Transform Your Process with Internal Audits
To meet all the above attributes- It would be a wise move to smart audit tools that continually seek to improvise their contribution to the company and find new ways to effectively suit the changing needs.
Grab Internal Audit Excellence with ECAT
Stay on the top of regulatory requirements, evolving needs and emerging risks and facilitate smooth compliance by solving issues that impact your company’s audit behavior with ECAT. With us, always expect more!