February 22, 2016
Internal audit is one of the most important elements of corporate good governance. Even so, many internal audit teams are underutilized despite being well versed in testing for corruption-related activity like fraud. Here are five quick ways to get your audit team more involved in your company’s anti-corruption efforts.
- Look in The Mirror. The independent and impartial approach of your audit team can be crucial for objectively evaluating how well your compliance program has achieved its stated mission. That is, do your employees actually follow compliance procedures? Auditors can measure, for example, what percentage of employees have signed the anti-bribery certification or completed training. Importantly, the audit should note instances where procedures were circumvented or otherwise ignored.
- Testing, 1-2-3. Detailed review of selected transactions in potential high-risk areas is key to monitoring your compliance program. Start by looking at payments to sales representatives, intermediaries, and other high-risk vendors. Auditors can, for example, check wire details and other transactional documents to ensure that payments were delivered in adherence with corporate policy and contractual language.
- Reconcile the Books. Auditors are typically helpful in reconciling a company’s books to better account for travel expenses, sales figures, and other record-keeping issues. Auditors can also ensure that preventative controls are working accurately. For example, an auditor can check an employee’s estimate of a future project’s total value against the ultimate cost.
- Audit Third Parties. S. regulators recommend that companies exercise audit rights on their high-risk third parties. Auditors can review outlays and invoices by third parties to detect red flags. That means compliance teams should regularly train their auditors to recognize corruption red flags, as they are not always the same as what auditors are typically trained to spot.
- Assess Risk. Because auditors are on the front lines of identifying commercial fraud within a company, they offer a wealth of wisdom to help compliance teams perform risk assessments and identify opportunities for corruption. Interviewing auditors during annual risk assessments can help compliance teams identify any gaps in their compliance program and devise ways to plug them.
What other methods have you used to engage your audit team? Let us know in the comments below.
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