Audit Planning: Why Is It Important and What Are the Best Practices for Success?

Audit planning is the essential first step in the audit process, the foundation of a successful audit. Plan effectively, and your entire audit workflow will be made smoother and swifter. Get the process right, and your fieldwork, analytics, issue management and reporting will be more robust, comprehensive and accurate. Planning enables you to identify the key risks and controls your audit should cover, ensuring nothing is missed. The benefits cannot be underestimated. “Fail to plan and plan to fail” is a well-known maxim: but what should the audit planning process be? What does best practice look like? There are numerous factors to consider when planning an audit; here, we look at what they are, examine the benefits of the audit planning phase, and explore what audit planning software should deliver to help.  

What Is Audit Planning?

Internal audits and control are vital, but they can be costly and complex without the proper structure. Whether you are auditing for your internal control purposes or complying with external regulations like Sarbanes-Oxley, effective audit planning enables you to bring order to the process and focus on the right risks to drive strategic insight. Audit planning should be your first step when starting an audit. Done effectively, it will drive efficiency across your entire audit workflow; it should encompass the audit’s scope, nature, and timing. Planning your audit ensures that all areas of the process are covered and given appropriate attention. It can also help you identify any potential problems or obstacles with the auditing process, map out activity so that it is carried out in a timely way, and manage your audit workflow for maximum efficiency.  

Why Is It Important?

Businesses today face numerous and evolving risks. Effective audit planning ensures that you measure the right risks — and as a result, derive the strategic insights you need to manage and mitigate the threats your business faces. In a world of ever-increasing governance, risk and compliance obligations, your audit process cannot be a tick-box exercise. It’s a real-world measurement of your ability to manage your business processes and policies and the controls you put in place to measure them. Your audit process needs to deliver value to your board and top executives; effective audit planning will allow you to achieve this.  

Benefits of Audit Planning

Taking the necessary steps will:

• Identify priority areas to ensure you focus where it matters.
• Make audit workflows and processes more efficient.
• Help you to identify — and engage at an early stage — key process owners, and your “first line of defense” reduces costs by minimizing duplicate work.
• Identify where manual and repetitive internal controls work can be automated, increasing robustness and assurance.
• Enable you to pinpoint and capture the metrics you need to measure and manage enterprise risk across your organization.
• Drive optimum scheduling and project management.
• Audit planning helps you approach the audit process. You may be transitioning from paper-based, spreadsheet-led auditing processes to a more integrated, risk-driven approach. You may already use technology solutions to support your audits.

Whatever your approach, planning minimizes wasted time and duplication and brings crucial focus to the audit process.  

What Is Best Practice in Audit Planning?

So you’ve identified audit planning as the holy grail for a successful audit. What happens next? — you may be wondering how to do it, what the essential steps are and whether you can draw on a best practice example to help you.  

5 Best Practice Steps

1. Assemble your team. Who needs to be involved in the audit planning phase? Ensure you include the right people — those with a comprehensive understanding of the audit and control process and the right skillsets and experience.
2. Assess the risks you face. What is the scope of your audit? Your planning needs to capture all the areas that need to be audited to ensure a comprehensive approach. What are your high-priority risks, either because they’re particularly material or more frequently occurring? Review previous years’ audits and identify any new risks that have arisen since the last one.
3. Decide on your audit approach. This will be determined by how you manage audits (using software or manual processes, or a combination of both), how you categorize the risks identified in step 2, and the resources at your disposal.
4. Brief your audit team — ensure they are clear on their roles, your process, timescales and next steps.
5. Create a risk-based audit plan for your entire audit universe, including an activity schedule, to ensure a smooth and comprehensive audit process.

 

Best Practice and Audit Planning Tools

Best practice audit planning will cover the steps above, giving you complete oversight of your risk landscape and the controls that your organization uses to manage its risks. Many businesses are turning to audit planning tools and audit management software to manage this planning process and the broader audit. Employing software can bring structure and rigor to the audit, including your audit planning process; good audit workflow software supports planning, scheduling and project management, and document management — capturing a library of past audits and templates that minimize rework and maximize consistency. The latest audit software can be used offline or via apps, enabling you to conduct planning and fieldwork on-site. Harness technology to send requests and reminders to members of the audit team, and speed reviews and sign-offs. From planning through to the entire audit, the innovation and technology characterized by Diligent’s audit solutions are making the modern audit process quicker, simpler and more reliable. You can keep up to date with all the latest innovations in audit planning, audit processes and audit technologies — as well as other governance, risk and compliance hot topics, in Diligent’s GRC Newsletter. You can sign up for the newsletter here.