Sneak Preview: Internal Auditors Can Provide Beneficial Insights

(The following was excerpted from a recent article in the Single Audit Information Service.) Federal award recipients can gain insight on how to improve their internal control policies and procedures by working with their internal audit departments, if available, but such collaboration must allow for open discussion and coordination to effectively address and manage potential risks, according to two presenters at the National Grants Management Association’s recent annual grants training in Crystal City, Va.

“Communication is so key; you know your programs better than anyone else and you know where your problems are,” Vanita King, director of internal compliance for the Washington Metropolitan Area Transit Authority, told attendees. “You want to self-identify [those problems] to tell internal auditors what you are doing to correct them. Also, if you suspect something concerning, we’ll come in and [look into it] for you. Find out who your internal auditors are and connect with them.”

King and fellow presenter Eric Russell, senior manager with Crowe LLP, said that internal auditors help to prevent and detect issues of noncompliance, fraud, waste, abuse and improper financial reporting. Internal audit departments can conduct audits, assessments, reviews and consulting activities, ultimately devising an audit plan.

“Everyone has risk; the question is how you respond to it and mitigate the risk,” Russell said. “Our goal is to know if internal controls are operating effectively and efficiently, and whether policies are being implemented in the first place. If no one is reading the [internal control policies], you have a problem.”

During their risk assessments, internal auditors will analyze the risks inherent in a given environment, process or activity, as well as the residual risk after considering the presence of internal controls. The presenters stressed that the risk assessment should be documented and should include an in-depth summary of the risk results. In addition, management of the entity should be aware of both the risk assessment results, as well as how the risks have been addressed in their internal audit plan.

(The full version of this story has now been made available to all for a limited time here.)

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