Auditing is a critical process for businesses and organisations of all sizes. It provides insights into financial health, compliance and operational efficiency. However, the real value of an audit is most often realised in the post-audit phase. In this article, we will explore the key steps and strategies for making the most of audit findings to drive improvements, optimise operations and ensure a positive return on investment for the audit process.
The hope for this article is to either assist new auditors who are in the process of building an effective Auditing function or at the very least act as a reminder to the more experienced auditors about effectively utilising audit findings.
1. Review and identify
After the audit is completed, the first step is to carefully review and analyse the audit findings. This includes financial statements, compliance reports and any other relevant data. Look for patterns, trends and outliers to help with understanding the issues identified, their root causes and the potential impact. It is essential to identify both the strengths and weaknesses highlighted in the audit. Recognizing what is working well is just as important as addressing areas that need improvement.
2. Prioritise and establish corrective actions
Not all findings are of equal importance. Prioritise them based on their potential risk, significance and impact on your organisation. Focus on high-priority issues first. Create detailed corrective action plans for each finding. These plans should outline the specific steps to address the issues, assign responsibility, set deadlines and allocate resources as needed. Put your corrective action plans into motion – this may involve process changes, training, resource allocation or other actions necessary to rectify the issues.
3. Resource allocation and communication
Commit to addressing the findings – allocate the necessary resources, whether it is budget, staff or technology, to implement the recommended changes effectively. Effective communication is key in maintaining transparency and building trust within the organisation. Ensure that all stakeholders are informed about the audit findings and the action plans. This includes employees, management and in some cases, shareholders or regulatory authorities.
4. Continuous monitoring
Implement a system for continuous monitoring of the changes and improvements. Ensure that your corrective actions are Specific, Measurable, Achievable, Relevant and Time-bound (SMART) making it easier to track progress and measure success. Regularly track the progress of corrective actions and ensure that responsible parties are meeting their deadlines and that the actions are effective in resolving the issues. Audit findings can be valuable sources of information to help the organisation grow and evolve. Implement a schedule for periodic audits to ensure that the issues have been resolved and that new issues are promptly identified.
5. Feedback and Learning
Establish a feedback loop where employees and relevant stakeholders can provide input on the effectiveness of the changes and share any additional insights. Use the findings as an opportunity for organisational learning. Share insights gained from the audit findings to improve internal processes and avoid similar issues in the future.
6. Document everything
Keep thorough records of the audit findings, corrective action plans and progress reports. This documentation is essential for audit trails and compliance purposes – not only for internal use but also for potential future audits. Ensure all action plan updates are recorded and the associated evidence (documents, photographs, videos etc.) is safely stored. Ideally your audit function should be software enabled which naturally ensures that everything is documented as well as driving ownership and accountability for action plans.
7. Reporting and recognition
Keep senior management and the board of directors informed about the audit findings and progress. They should be aware of the organisation’s commitment to improvement. Assess the impact of the audit findings and the changes made. Calculate the return on investment, both in financial and operational terms, to determine the audit’s overall value. When you successfully address audit findings and improve your processes, celebrate the achievements. Recognise and reward the efforts of those involved in the corrective actions.
How do you make the above steps easier, more cost effective and reliable? Automate the whole audit process.
Automation helps to streamline repetitive and time-consuming tasks, which can free up an auditor’s time to focus on more valuable activities, such as risk and control assessments or identification of new or missing risks. Automation reduces human error and minimizes the risk of errors associated with manual data entry and calculations, leading to more accurate and consistent audit results. Remote working for auditors makes life simple when using a software solution as the auditor can do the same amount of work whether in the office or not.
In conclusion, a successful audit should not end with the issuance of a report. Instead, it should be a catalyst for positive change and improvement within an organisation. By carefully analysing audit findings, prioritising recommendations and taking decisive action, businesses can ensure that the audit process serves as a valuable tool for enhancing performance, compliance and overall success. In the end, the real value of an audit lies in its ability to drive positive change.
You can find further information at: https://barnowl.co.za/knowledge-centre/integrated-grc-insights-blog/6-ways-risk-based-auditing-adds-value-to-your-organisation/
Warrick Asher
October 2023