How to Plan for Internal Audits Schedule Based on the Risks?

How to Plan for Internal Audits Schedule Based on the Risks?

Besides having a financial audit that an audit firm in Johor Bahru will conduct for the companies, business owners should also schedule internal audits for their business. Big and complex companies may have an internal audit department. Internal audits are crucial in tracking the efficiency of the internal processes and controls of a company.

When the internal audit manager has to decide which internal audit he should schedule, he needs to face a lot of stress from various sources. These may include the request from the board of directors, external auditors, managers of other departments, and so on. As a result, he may need to face a pile of messy audit projects which are unrelated to each other.

If the internal audit manager schedules these requests, he may cause waste in the auditors’ time. This is because some of the sponsors may assign a high priority for their projects. However, this has a low possibility of improving the operation of the company after they auditors perform the audit. Thus, one of the ways the internal audit manager can use to plan for audit schedules more efficiently is to prioritise the parts of the business that are exposed to the highest risks (Also see Introduction to Audit Risks).

Scheduling internal audits according to the risks means that the internal audit manager needs to apply a ranking system consistently. By using that ranking system, he should list the areas which may cause the business to fall into severe financial threats (Also see Common Bookkeeping Errors that You Should Avoid) as the top internal audit projects. Then, he should schedule other project requests which he thinks have lower risks after those crucial audit projects. Thus, the audit manager can defend the audit schedule he has planned based on the ranking system. If he receives requests from other managers to adjust the audit schedule, he may tell them that the adjustment may cause the company to be in big trouble. This may help him in getting cooperation from other departments.

The company’s audit committee should approve an audit schedule which is planned according to associated risks in writing. Hence, if there is an adjustment on the audit schedule, it is no longer the responsibility of the internal audit manager but the audit committee. The audit committee is supposed to be senior enough to avert any requests from various departments to change the audit schedule.

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