What are elements that could help an internal audit department run properly?
Hereunder are the elements that will improve the effectiveness and efficiency of the internal audit department of an enterprise:
- Strong and practical supports from the highest – level governing body (the Board): Besides approving the important documents such as internal audit charter, audit processes, ... the board must ensure that these documents are truly valid in practice through their clear attitude and actions to help internal auditors fulfill their authorities and responsibilities. Internal audit department's discussion and recommendations must be highly appreciated and supported by the board, rather than ignored or delayed. It can be said that internal audit is just for appearance if it is not strongly backed by the Board.
- Internal audit charter, audit processes, and audit approaches should be officially documented and be continuously updating and adjusting, rather using verbal communication or email: Documentation will help everyone efficiently adjust their thinking and actions in a same direction rather than going different ways.
- Purposes, authorities, responsibilities of internal audit presented in the internal audit charter should be in line the Vietnamese and the International Standards: Generally accepted standards are those approved by many professionals, therefore they are the best to follow to ensure the fulfillment of internal audit and avoid conflicts related to independence and objectivity. Enterprises can make some adjustments (in comparison to the standards) to make the internal audit charter better reflecting the enterprises’ characteristics and requirements, but must ensure that such adjustments do not create significant gaps.
- Internal training and communication about the purposes, authorities and responsibilities of internal audit should be extensively focused and performed regularly: This will help remove biases of other departments about internal audit department, therefore enhancing their collaboration and coordination.
- Human resource with adequate and appropriate knowledges and personalities: Internal audit needs personnel who meet the high-level criteria so as to able to provide independent and objective opinions with quality to the Board and senior management. Therefore, recruitment and training activities should be properly invested. In addition to the in-house resources, enterprises should consider outsourcing solutions to compensate for the shortages of personnel.
- Regular performance assessment of audit quality: This is one of the requirement of internal audit standards to help enterprises maintain satisfactory audit quality. Enterprises can perform this activity by themselves or outsource it to a proper auditing firm.
- A good internal control environment: With a good internal control environment, the roles of internal audit could be best demonstrated, as everyone in the enterprise is well aware of controls and risks, making the coordination with internal audit very effective and efficient.
What are solutions when other departments do not well cooperate with internal auditors?
- Internal auditors need to understand the causes and nature of the issue so as to effectively consider suitable solutions for both short-term and long-term.
- If the Board’s support and intervention needed, auditors need to raise the issues to them to seek for further support.
Short-term solutions usually come from the direct intervention of the Board, and long-term solutions come from the people’s awareness and attitude about internal audit. For example: improving internal communication, effective internal training, enhancing control environment, adjusting charter/ processes/ approaches. - Outsourcing can be an effective solution in some cases.