Traditionally, when people hear the word audit, most instantly think financial records.
This is understandable, because the first audits to be conducted were technically financial, although the currency used was the bartering of goods rather than coin.
Records still needed to be kept and checked to keep track of the number of baskets of corn you received for your lama fleece, and if you were paid in full or still had a partial payment owing.
With this in mind, when most people hear “auditor”, they instantly translate this to mean “accountant”, but this is not always the case, as the Institute of Internal Auditors – Australia ( IIA-Australia ) also discusses.
Since the beginning of the industrial revolution, the way we conduct business has evolved. We decided we need our workplaces to be safe, for responsibilities and accountability to be defined and to create consistency in how things are done.
To do this, we started writing things down. We have legislation for every industry, standards for things like work health and safety and quality management, contracts for our customers and organisations we do business with. Businesses created policies, procedures, work instructions, codes of conduct and ethical standards.
We now have mountains of documents telling us everything we need to effectively complete any task in any industry.
But how do we know if people are following any of it? With our desire to do the right thing came the birth of a new breed of auditors – the compliance and operational auditor, more commonly referred to as the internal auditor.
The simple description of an internal auditor is someone who reviews the documentation relevant to an organisation and observes the current work practices to confirm they are compliant.
For me, I don’t feel that definition does justice to the full extent of the role. Being an internal auditor is complex and demanding. Not only do you need to be able to understand and interpret a wide range of legislation and legal documents to determine the compliance requirements, you also need to develop an understanding of the day-to-day operations of all aspects of the organisation.
For example, on one day, you might be auditing of the staff’s understanding of the code of conduct and how it relates to their role.
The next day, it might be a reconciliation of payroll deductions.
The day after that, you might sit in on a particular step of a manufacturing process.
The next day, you could be auditing the disaster recovery plan for the IT department.
And this is only a small selection of what may be required by an internal auditor.
Think of any task that may be performed by a staff member, from the cleaner to the CEO, and I can guarantee that an internal auditor has conducted an audit on it.
It is this diversity and challenge that I love about auditing. You can learn so much about the industry, organisation and the individual roles and how they all fit together.
With this bigger picture overview, you can also see the areas and work practices that are working well and those that could benefit from improvement strategies.
By taking the time to speak with staff at all levels who are involved with the different stages of a procedure or process you can also give a voice to those who may not feel confident approaching senior management with their thoughts and ideas.
The information gathered during an audit engagement can be valuable to the decision makers as it provides a snapshot of exactly how each area is currently performing, unfortunately there are times when things that look good on paper tell a very different story in practice.
So, while a basic understanding of financial reporting can be beneficial in certain areas of internal auditing, an open mind, the ability to understand legal documents and how they apply to the organisation, relationship building skills and a willingness to learn things that may not be specifically listed of your position description, are far more important.
I am definitely not an accountant, but should you feel the need to label me, I am more than happy to go with audit specialist!