I have written extensively over the years of the need to improve the timeliness of internal audit results. Nothing undermines the value of an internal audit more than delivering the results when it is too late for management to correct a problem or too late to avoid further fraud, waste, or mismanagement.
If lengthy untimely audits are one extreme, the other is what I call “drive-by” internal audits. These are so-called internal audits in which either canned internal audit programs or checklists are used to facilitate a quick audit or report. In the financial services and retail industries, branch or store audits are sometimes conducted in this manner.
Don’t get me wrong — drive-by audits can provide important assurance on internal control effectiveness and compliance matters. They also can serve as fraud deterrents. However, their use does not always conform with The IIA’s International Professional Practices Framework, and they rarely provide management in the area subject to audit with real value. I have seen the technique used throughout my career, and I often thought of these engagements as “inspections” rather than true internal audits.
To avoid being guilty of ineffective drive-by auditing, I offer five litmus tests by which you can assess your approach:
As with all of my blogs, my views on drive-by auditing are my own personal thoughts and do not constitute official IIA guidance. However, I would encourage any internal auditor who might be conducting canned inspection-type audits to reexamine your approach. Use the five questions above to re-engineer your internal audits into more risk-based, client-focused engagements.
As always, I welcome your thoughts on this important topic.