Step 1: Identify Key Controls – Determine which processes, systems, or transactions require review. Examples include cash handling, payroll processing, and inventory management. Focus on controls that prevent errors or fraud. Document these processes clearly before testing.
Step 2: Perform Testing – Examine transactions and process records to assess whether controls are working as intended. Conduct walkthroughs, sample testing, or analytical reviews to detect anomalies. Use checklists to ensure thorough coverage of all key areas.
Step 3: Document Findings – Record observations, note deviations from policy, and provide practical recommendations. Ensure documentation is detailed enough for management to understand risks and necessary actions. Include supporting evidence, such as screenshots or transaction records.
Conclusion: Internal audits strengthen governance, identify process weaknesses, and provide actionable insights to management. Conducting thorough audits regularly improves operational efficiency and mitigates risks.