Choosing an Internal Auditor
A career as an internal auditor has been hailed as the number one choice for the year 2007. Because of the more stringent laws such as Sarbanes Oxley and extra controls due to the scandals in corporate accounting, there are several companies offering top dollar compensations to finance and accounting professionals for providing internal audits. Since internal audits can be expensive, it is better to ensure the availability and allocation of funds before you hire an internal auditor.
Although most of the companies conduct annual or bi-annual reviews of procedures and processes for remaining compliant, and hire internal auditors to do it for them, there are times when a government agency can come to audit things themselves. This can be a stressful time, and if you are able to choose the right internal auditor, then it will be possible to save penalties and fines.
You need to determine several factors before you choose an internal auditor. Primarily, it is very important to know the role of an internal auditor to enable you to match your compliance strategy with the experience, education, and skills to get the job done effectively. By providing a service to your company and acting as a go between for government compliance offices, internal auditors should be aware of what is the latest in compliance governance. Hence, before choosing an internal auditor, it is essential to make sure that all the credentials are checked thoroughly. Including the chief financial officers along with the human resource department and others, who are in charge of making decisions at a high level, is also a good idea.
Experience must the most important criterion when you choose someone who will be accessing all the physical and intellectual property records, along with delicate financial information. This needs to be done for the enhancement of internal controls and for remaining compliant with the standards set by the government. You must check the references whenever you appoint any internal auditor. His or her previous audit information and licensing information should also be taken into consideration. There are several internal auditor institutes. For instance, The Institute of Internal Auditors is a professional organization, which provides certification, guidance and educational research to its more than 130,000 members. This organization is like a clearinghouse for the checking of references and licensing.
Internal auditors should try and specialize in the type of auditing that is required, keeping the business needs of the company in mind. For instance, in case of quality management auditing, the internal auditor should posses the capabilities of understanding and grasping the company’s business completely, along with the standard operating procedures and quality controls. This needs to be proven by consistent track records of the QMS audits. If it is financial analysis or risk management that is required, then, along with being individually bonded, and within his or her own auditing company, internal auditors need to be completely objective and impartial. This will ensure that, while there is no involvement of any personal nature, the end result will be to share all the downfalls, make recommendations and places where there is a need to tighten compliance for ensuring that your organization is ready to pass any type of auditing test. According to reports from NASDAQ, only half of all the companies that are listed on the exchange actually have internal auditor functions in place. This lack of practice is dangerous and can cost a lot in penalties and fines.