Best Practices for Setting Up a New Audit Department

[auditnet]

A recurring question that I receive through AuditNet’s Ask the Auditor is on setting up an audit department. Therefore I have decided to develop a monograph for AuditNet on Establishing a New Internal Audit Function. I am looking for best practices to incorporate into this document in order to provide a framework for organizations creating a new internal audit function. If you have set up an audit department from the ground up I would like to hear ideas you used to systematically build an audit department. Obviously the first step is hiring the right person. There should be some guidance from either an audit committee or senior management on the role and responsibilities of the internal audit function. The next step would be to create an Internal Audit Charter. There would have to be an entity wide inventory of auditable units followed by a comprehensive risk assessment. This should result in an audit plan (long and short term) which also identifies the resources necessary to staff the function. Hire the staff to conduct the audit after which the audit projects could be scheduled. An audit manual would need to be created to formalize the department’s policies and procedures and approach to auditing.

If anyone has any experience in setting up a new audit function and could provide me with tips and documentation it would help in developing the monograph.

Thanks,

Jim

[bkrish07]

Well Jim, you also need to have audit checklists in place. The checklists should preferrably be reviewed by the stakeholders so that there are no conflicts.

[CharlieWalker]

You also need to consider the technology requirements of the department. Depending on the size/nature of the department, you may want specialist software for managing workflow and documenting results, and may also have a need for a CAATs package.

You then also need to consider the training requirements for any software (if the individuals being hired are not already skilled in the software), which are far too often overlooked.

[auditnet]

Charlie,

An excellent point as technology plays an important role in establishing a new department. Training is also a key ingredient required for success. Training needs must be assessed each year in order to maintain and improve skills.

Jim