Internal audit checklists are used by company employees to review financial and operational information, ensuring no material deficiencies in accounting processes, internal controls, or other business operations. Planning, intelligence gathering, compliance testing, and production measurement testing are some basic guidelines. Different types of internal audits have their own checklists, including operational, compliance, and performance audits. These audits help managers make decisions to improve business operations.
An internal audit checklist is the specific instructions or guidelines used by auditors to review a company’s financial or operational information. Internal audits are usually conducted by company employees and review a company’s financial accounting process or internal controls. Company executives use them as an informal review process to ensure that there are no material deficiencies in their financial accounting processes, internal controls, or other business operations. While specific checklists may vary depending on the company’s operations, some basic guidelines for the internal audit function may include areas such as planning, intelligence gathering, government regulatory compliance testing, and production measurement testing.
An important part of the internal audit checklist is the planning phase between executives and internal auditors. Internal financial audits allow managers to understand how their accounting processes work on a day-to-day basis and limit the possibility of fraud or misappropriation. Other internal audits may include an operational, compliance or performance style audit. Each type of internal audit usually has its own checklist.
Operational audit checklists may include a copy of the company’s standard operating procedures for each business function and instructions for auditing employees responsible for conducting business operations. Items listed may include ensuring that employees follow company rules, that there are no obvious security breaches, and that company inputs are used appropriately.
Compliance audits can use a checklist developed by an external organization that requires the company to follow certain rules for maintaining professional certification. The Occupational Safety and Health Administration (OSHA) in the United States is a common example, and this agency usually requires US companies to undergo audits to maintain occupational safety certification. The guidelines used for compliance audits provide managers with an objective opinion on how the company maintains the rules and guidelines of external organizations; this review enables managers to make decisions to improve business operations for maintaining certification.
Performance audits are conducted by internal auditors to determine the performance of individual employees at their jobs or the company’s ability to meet objectives. These internal audit checklist items may include measuring employee productivity or the company’s performance on certain goods or services, reviewing the time taken to complete certain activities, and comparing the company’s key indicators with the industry standard. Performance audits can help managers make decisions to improve the effectiveness and efficiency of individual business functions.
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