Crisis prevention begins with an awareness of risk. That’s why so many businesses—both big and small—take the time to conduct internal audits. An internal audit examines specific areas of your business’s operations and procedures with the goal of uncovering any place where you’re not complying with laws and regulations and/or aren’t doing enough to address risks that might lead to serious financial consequences. A good internal audit allows your business to be proactive and correct problems before they damage your stability, credibility, or bottom line. Here are the top five risk areas that internal auditors examine:
In 2002, the United States government passed the Sarbanes-Oxley Act, which established new regulations for accounting practices and financial reporting, among other provisions. The act is long and involved and applies to a large number of American businesses.* And it’s just one example of government regulation that may impact your business.
In fact, it’s likely that there are dozens, if not hundreds, of local, state, and federal regulations that you are expected to follow. From financial regulations like Sarbanes-Oxley to federal OSHA regulations to local fire codes and tax laws, the government expects you to play by the rules. And if you don’t? You could face anything from a fine to a prison sentence. That’s why regulatory compliance is one of the most important types of internal audits. You want to make sure your business is following all the rules so you don’t suffer penalties.
Your business’s culture may seem unrelated to its finances, but the two are far more closely associated than you might think. An audit of your business’s culture can look for everything from patterns of behavior that could lead to employment lawsuits to systematic issues of employee conduct that could be negatively affecting efficiency to unclear communication that could be preventing everyone from working toward a common goal. By making sure your culture is in line with your industry’s best practices, you can reduce the chances of financial loss.
Cyber attacks cost the average U.S. firm $15.4 million a year.† Needless to say, a good cybersecurity system can save your business from serious financial harm. During an internal audit of your cybersecurity systems, auditors assess the level of risk you’re exposed to and determine if you need to upgrade your technology or change your procedures to meet the latest standards. If you can avoid vulnerabilities in your network systems, you can discourage or prevent cyber attacks.
Most businesses use vendors, form partnerships with other organizations, or hire consultants and contractors. Every one of those relationships can expose your business to increased levels of risk. From a purely financial standpoint, a third-party relationship audit can examine accounts payable and receivable to ensure there are no irregularities or missed opportunities. The audit can uncover contracts and areas where the third party’s regulatory and cybersecurity decisions could cause problems for your business. You don’t want a flaw in the procedures, accounting, or computer systems of your business partners to negatively impact you.
While an internal audit is all about managing risk, it’s not the only way to avoid problems. All businesses have either formal or informal systems of managing day-to-day risk. These include everything from financial reporting sign-off procedures to methods for verifying the legitimacy of reimbursement requests. But these risk-management systems can themselves put your business at risk. If you aren’t using appropriate procedures to avoid mistakes in matters of operations, regulatory compliance, and financial reporting, then you could be setting yourself up for trouble. Making sure your everyday risk management is solid can save you costs down the line.
If you’re asking yourself “How do I become an auditor?” or “How can I get a better grasp of auditing?” there’s good news. Some of the best online universities offer a Graduate Certificate in Auditing. These online certificate programs serve as a kind of auditing degree program, where you can take graduate-level courses that are focused on teaching you how to help your business or other businesses manage and control risk, comply with rules and regulations, prevent and investigate fraud, and keep sensitive financial information secure.
In addition, when you earn an online certificate in auditing from the right online school, you may be able to apply the credits you earn toward an MS in Accounting. If you’ve been considering an auditing degree, an online certificate can be the perfect choice. It’s a great way to learn the skills you’ll need to conduct internal audits.
Walden University is an accredited institution offering an online Graduate Certificate in Auditing program. Expand your career options and earn your degree or certificate in a convenient, flexible format that fits your busy life.
*Sarbanes-Oxley Act of 2002, on the internet as a PDF at www.sec.gov/about/laws/soa2002.pdf.
† Ponemon Institute, 2015 Cost of Cyber Crime Study: Global, on the internet at http://www.cnmeonline.com/myresources/hpe/docs/HPE_SIEM_Analyst_Report_-_2015_Cost_of_Cyber_Crime_Study_-_Global.pdf .
Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.