What should the internal auditor do this? Name two point
As an internal auditor, there are several important tasks that you should prioritize. Here are two key points:
1. Risk Assessment: Internal auditors should conduct risk assessments to identify and evaluate potential risks that can impact the organization's objectives and operations. This involves reviewing the organization's processes, procedures, and controls to identify areas of vulnerability or non-compliance. To perform risk assessments, you can follow these steps:
a. Review relevant documentation: Gather and study information about the organization's internal control systems, policies, and processes.
b. Identify key risks: Analyze the information gathered to identify potential risks that could impact the organization's objectives, such as financial, operational, compliance, or reputational risks.
c. Evaluate risks: Assess the probability and impact of each identified risk to prioritize them based on their significance.
d. Communicate findings: Clearly document and communicate the identified risks to management, along with recommendations for how to mitigate or manage them effectively.
2. Control Testing: Internal auditors should test the effectiveness of the organization's internal controls to ensure they are operating as intended. This involves examining the control environment, testing control activities, and verifying compliance with applicable regulations. To conduct control testing, you can follow these steps:
a. Select a sample: Determine the appropriate sample size of transactions or activities to test. This should be representative of the overall process or control being evaluated.
b. Perform tests: Apply the predetermined criteria or procedures to the selected sample to determine whether the control is operating effectively. This may involve reviewing documentation, conducting interviews, or performing data analysis.
c. Record and analyze results: Document the test results, noting any exceptions or deficiencies identified. Analyze these results to identify patterns or trends that may indicate systematic control weaknesses.
d. Report findings: Prepare a clear and concise report detailing the results of control testing, including any gaps or weaknesses identified, as well as recommendations for improvements or corrective actions.
By focusing on risk assessment and control testing, internal auditors can play a crucial role in enhancing an organization's governance, risk management, and internal control processes.