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Considerations for internal audits

Guest blog by Arnold Herrmann
Guest blog by Arnold Herrmann

Management consulting, Quality Assurance

If properly prepared for and executed, internal audits are an exceptionally useful tool to give shape and substance to quality assurance and keep it top of mind for all members of an organization. In practice, it is not always easy to conduct an effective audit. Many organizations choose to outsource their audits instead.

Consulting firm Herrmann has been conducting audits for myriad clients on an almost daily basis, in addition to frequently training new auditors. We’ve invited owner Arnold Herrmann to share more about this topic and discuss the pros and cons of bringing in external parties for internal audits.

Conducting audits

Why should you consider bringing in someone from outside the organization to conduct an audit?

 

To answer that question, you must first ask yourself what you want to achieve with the internal audits. Is your only goal to “check” whether people are following the rules and agreements? Do you want to reflect on your current practice and have someone examine it critically and objectively? In other words, are you looking for improvement opportunities within your organization? Especially when striving towards the latter, there is much to be said in favor of bringing in a third party to assist with your internal audits.

Identifying issues faster and more efficiently

Why? Your own people are far more familiar with the organization and its processes, which allows them to identify issues faster and more efficiently, right?

Although it is true that your own people know far more about your organization than an outsider, that knowledge does not always work in your favor. An auditor should be unbiased, curious, able to ask pertinent questions and especially ask follow-up questions to get to the bottom of things. In my experience, when an auditor knows too much about the topic they are auditing, two things usually occur. First of all, important topics are overlooked or too easily dismissed. After all, people believe they already know the answer to the question, so it is all too easy to move past the topic quickly or skip over it entirely. Secondly, they tend to focus heavily on one specific aspect, often because the auditor has heard there is something amiss there. Actively searching for things that are going wrong hardly ever leads to a positive outcome.

Auditing: yes or no?

Are you saying that it is best not to have your own people conduct any audits at all?

No, that is not what I'm saying. What is crucially important, however, is to have the audits conducted by people who possess a few specific characteristics. You are guaranteed to find these people in your organization. Look for a group of socially adept employees with a practical mindset who understand the importance of quality assurance, are interested in doing audits and who have the time to do so. Next, it is important to properly show these people the ropes. It is often enough to offer them a practical training and some assistance, particularly during the initial few audits they perform

External auditor

Can a case be made for bringing in an external auditor?

When an external party brings an issue to light, it is generally taken far more seriously than when the same message is delivered by a colleague. It is easier for them to put topics on the table. Furthermore, an external auditor usually visits many different organizations. You can use their experience to your advantage.