It
takes leadership to enhance and protect an organization’s values and visions. A
professional chief auditor must have the courage and confidence to look atboth
outwards and inwards of the organization. They should be ready to take
initiatives and consider risks that have been given little attention in the
past. And make changes.
Plans
for internal audits often don’t take into account some of the most common risks
associated with an organization like cybersecurity, governance, and
sustainability. Most of the plans do not allocate even a single resource to
certain key areas.
Here
are some of the takeaways regarding each risk area:
Organizational Culture
When
things go wrong in an organization, the root cause is often a toxic
organizational culture with bad communication. Most of the internal
auditors prefer to stick with audit issues that are easily quantifiable and
ignoring keep the company’s cultural issues. Risks related to organizational
culture should never be overlooked.
To
avoid this, here is what an internal auditor can do:
· Identify the organization’s communication channels and tools.
· Determine the risk of inaccurate and false information.
· Determine which information gets more attention to the company.
Environmental Risks
· Identify the organization’s communication channels and tools.
· Determine the risk of inaccurate and false information.
· Determine which information gets more attention to the company.
Environmental Risks
Audits
should include a detailed report on environmental risks in association with the
organization. These risks should be approached the same way as other risks are
dealt with like fraud, IT, etc. These risks include the release of toxic
material, contaminated food, dangerous workplace conditions, ergonomics that
affect employee’s health and efficiency.
The
majority of the companies have failed to include these risks in internal audit
risk assessment. It is still an unfamiliar territory, but it will have a disastrous
financial and reputational effect on an organization if left untouched. Here’s
what internal auditors can do:
·
Get information on the full
scope of EHS risks and their impact
·
Determine if the level
of assurance is corresponding to the level of risks.
As
internal auditors cannot be expected to have full knowledge about environmental
specifics; thus, a more reliable approach is to get professional help from some
of the best accounting firms in Dubai. These experts can help you with an internal
and external audit on environmental risks and minimize future costs associated
with them.
Digital Risks
Digital Risks
In
this revolutionary digital age, many companies have established digital
strategies and have created teams to develop applications, websites, and other
digital channels. However, the audit generally lags in understanding these
technologies and digital methods. These digital networks raise several identities,
privacy, and security risks.
Internal
auditors should be equipped to include these risks associated with digital
programs in audit planning. In this fast-paced environment, the digital aspect
poses cyber risks with additional third-party risks that usually go unaccounted
for. Introduce new digital risk frameworks to clarify data flows and regulatory
implications in managing external parties.
Interpersonal dynamics
Interpersonal dynamics
Effectiveness
of an internal auditor depends upon his ability to navigate personal
interaction, pointing out potentially unsettling issues but still fostering
trust, and not seem like a whistleblower. However, most of the time, there is
limited interpersonal interaction between the audit and the organization.
The
gap between the auditor and the rest of the organization is bad for business.
The management may be less forthcoming with information and is less inclined
towards implementing audit recommendations. This makes it harder for the
auditor to carry out the internal audit and initiate a positive change in the
company. Following things can be useful to get the job done:
·
Learn soft-skills.
·
Figure out ways to
improve corporate culture.
Internal
auditors who lack empathy and “soft-skills” often fail to conduct a transparent
audit, and in worst cases, the management blames the auditor for their poor
performance. Another approach to this is to hire services of best accounting
firms in Dubai, offering trained professionals that can help with identifying
problems in your corporate culture.
Data Analytics
Data Analytics
The
internal audit uses data analytics for direct testing of internal
organizational control, for risk assessment and identifying potential errors in
data files that are later communicated to the management for correction. Most
auditors fail to embrace data analytics and use them in an organization’s
structures and processes.
Data
analytics is a game-changer for internal auditing. The data analytics can be used
to achieve a competitive advantage, to manage operations, and to ensure
strategic plans. One of the significantareas where it can be of enormous help
is keeping watch for frauds (which have cost Dubai firms millions of dollars),
by recognizing patterns to anticipate future risks and quick monitoring. Here
are a few things that can be of help:
·
Determine all uses of
data analytics.
·
Develop your data
analytics program.
·
Document data analytic
approach in internal audits.
Failure to provide a precise internal audit report
Failure to provide a precise internal audit report
As
discussed above, most internal auditors fail to address certain risk areas.
This fails to provide an adequate audit report, which can lead to a significant
negative impact. Fortunately, there are many best
accounting firms in Dubai to help you avoid most internal audit “fails”
by ensuring that the internal audit is adequately resourced, professionally
staffed, and operates on the highest levels of quality and integrity.
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