Internal audit is a process which provides assurance to the management regarding company’s risk management, control procedures and their operational efficiency. The recommendations provided by the Internal auditor and which are agreed by the management may not be implemented during the course of audit due to various circumstances. It may require some additional resources or adoption of a different methodology. Thus, there may be delay in the implementation of those recommendations. Hence the requirement of the follow up audit. It becomes important to the internal auditor to assure management that the recommendations provided as implemented effectively else the complete process of internal audit / review becomes redundant.
The assurance provided by the Internal Auditor is generally continuous in nature. It involves continuous monitoring of the risk, control procedure and operational efficiency. The internal audit goes through four distinct phases:
The suggestions provided in the reporting phase by the internal auditors and agreed by the management should be effectively implemented which is generally verified and tested in the next planning phase.The most common reason for audit findings not getting implemented is that they are not given the due priority by the managers / responsible person as they are busy with other day to day commitments. This happens because psychology of humans is to bend towards comfort zone and continue with their old habits.
The follow up is generally is the most ignored part in any of the Internal audit whereas on the contrary, the follow up audit should be an important element of the planning for the next cycle of internal audit. The follow up audit is the backward-looking process where the controls / areas which were reviewed and the recommendations provided are relooked and to check whether they are can be implemented in the present scenario. A follow up audit provides an official closure of all the audit findings and the recommendations. It also reduces the professional liability of the Internal auditor.
The follow up audit includes the steps like testing of the data for the current period based on the recommendations and the suggestive measures provided in the audit of the previous period, discussion and evaluation to ensure that audit recommendations provided have been implemented or appropriate steps have been taken to implement the audit recommendations. Often while conducting the follow up procedure, the Internal auditor may also find new risks which may be included in the planning of the audit of the next period.
Considering the documentation of the Internal audit work, the follow up audit report and the working papers forms an important part of audit documentation. Follow up log is maintained for the purpose which contains the log of observations from the previous audit reports and the status of their mitigation. Follow up audit report can be the part of Internal audit report or can be communicated separately as additional document. The follow up audit report makes the Internal audit report more “Lively” as compared to the one time report which are often forgotten after the completion of the audit.
Sometimes the follow up process may feel that the Internal auditors are nagging the auditees and the process owners. Yet, to make the Internal audit process successful and lively, the follow up process can never be over -emphasized. Follow up process will keep the auditee alert and aware that the issues / observations cannot be pushed under the carpet. Indeed, internal audit functions with a solid follow-up process are more likely to be respected and, better yet, valued in the organization.
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